Question

Refer to the following table to answer the following questions.

Price	Quantity Demanded	Quantity Supplied
$10.00	10	100
$8.00	20	80
$6.00	30	60
$4.00	40	40
$2.00	50	20
$0.00	60	0

If the price of this good is $6.00, there would be a ________ of ________ units.

a.         shortage; 20                d.         surplus; 30

b.         surplus; 50                  e.         surplus; 20

c.         shortage; 30

Answer 1

If the price of the good is $6.00

Answer - option d. Surplus ; 30.

If the price of the good is $6.00, then quantity demanded is 30 whereas quantity supplied is 60. As at this price, quantity supplied is more than quantity demanded, there occurs a surplus of goods in the market.

Surplus= Quantity supplied - Quantity demanded

Surplus= 60 - 30

Surplus= 30.

Hence, at a price of$6.00, there would be a surplus of 30.

Option a is incorrect because shortage of goods will not occur as quantity supplied is more than quantity demanded. Shortage occurs when there are not enough goods supplied to meet the quantity demanded. As at the price of $6.00, quantity supplied is more than quantity demanded, no shortage occurs.

Option b is incorrect because the amount of surplus is not 50 at a price of $6.00. At the price of $6.00, surplus is 30.

Surplus= quantity supplied - quantity demanded

Surplus= 60-30

Surplus=30.

Option c is incorrect because no shortage of goods will occur as quantity supplied is more than quantity demanded at the price of$6.00.

Option e is incorrect because amount of surplus is not 20 but 30 at the price of $6.00.

Surplus= quantity supplied - quantity demanded

At a price of$6.00, surplus= 60-30 = 30

Hence, at a price of$6.00, surplus is 30 and not 20.