How is price formed/determined concerning Macroeconomics and the terms of shortage and surplus?

Expert Solution

In macroeconomics price is known as General price level and its determination depends upon the aggregate demand and aggregate supply. Aggregate supply is an upward sloping curve an aggregate demand is a downward sloping one. And their interaction determine the output level in the economy and the overall price level
In microeconomics the concept of shortage and surplus arise. Generally market is said to be in equilibrium when there is no shortage or surplus so that there is no excess demand and excess supply.
However there can be cases when the price in the market is higher than the equilibrium and in that case there will be a surplus in the market. This is because the quantity supplied by the suppliers will be greater than the quantity demanded by the buyers.
At other times there can be shortages in the market when the price level is lower than the equilibrium price so that the quantity demanded exceeds the quantity supplied. Both of these conditions are a case of short run and the market will reach its equilibrium level in the long run.

Rahul Sunny answered 2 years ago

At what price does Shortage and Surplus occur ? Once a market has shortage and Surplus,...

At what price does Shortage and Surplus occur ? Once a market has shortage and Surplus, then what happens to the market price?

How big is the surplus or shortage at $3.40?

Refer to the table below. Fill in the surplus-shortage column (gray-shaded cells) Instructions: Enter your answers as whole numbers. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Thousands of Bushels DemandedPrice per BushelThousands of Bushels SuppliedSurplus (t) or Shortage (-)88$3.4065813.7071754.0075704.3078664.6080634.9081a. What is the equilibrium price in this market? At what price is there neither a shortage nor a surplus?How big is the surplus or shortage at $3.40? There is a (Click...

will a surplus or a shortage caused by a price control become smaller or larger over...

will a surplus or a shortage caused by a price control become smaller or larger over time explain

Complete the following table by indicating at each price whether there is a shortage or surplus in the market, the amount of that shortage or surplus, and whether this places upward or downward pressure on prices.

9. Market equilibrium and disequilibrium The following graph shows the monthly demand and supply curves in the market for calendars. Use the graph input tool to help you answer the following questions. Enter an amount into the Price field to see the quantity demanded and quantity supplied at that price. You will not be graded on any changes you make to this graph. The equilibrium price in this market is _______ per calendar, and the equilibrium quantity is _______ calendars bought and sold...

Suppose the prevailing price is US$6 per bushel. Is there a shortage or a surplus in the market

Price per bushelQuantity Demanded (bushels)Quantity Supplied (bushels)US$240,0000436,0004,000630,0008,000824,00016,0001020,00020,0001218,00028,0001412,00036,000166,00040,0002. Refer to Table 1-2. The table contains information about the wheat market. Use the table to answer the following questions.a. What are the equilibrium price and quantity of wheat?b. Suppose the prevailing price is US$6 per bushel. Is there a shortage or a surplus in the market?c. What is the quantity of the shortage or surplus?d. How many bushels will be sold if the market price is US$6 per bushel?e. If the market price...

Shortage or surplus of price control becomes ________ in the long run than in the short run.

Shortage or surplus of price control becomes ________ in the long run than in the short run. Tax burden or subsidy benefit becomes _________ in the long run than in the short run.Group of answer choices：Larger: SmallerSmaller: SmallerLarger: LargerSmaller: Larger

With a price ceiling, there is a transfer of surplus from producers to ___ and there may be a potential market due to shortage in the market.

With a price ceiling, there is a transfer of surplus from producers to _________ and there may be a potential ______ market due to shortage in the market.Group of answer choices：Consumers: BlackGovernment: GrayGovernment: BlackConsumers: Gray

8. Price controls on gasoline A. increase consumer surplus. B. create a shortage of gasoline. C....

8. Price controls on gasoline A. increase consumer surplus. B. create a shortage of gasoline. C. create a surplus of gasoline. D. increase producer surplus for all producers.

Explain what is consumer surplus, producer surplus and total surplus. Show graphically how a price floor...

Explain what is consumer surplus, producer surplus and total surplus. Show graphically how a price floor reduces total surplus.

Refer to the table below. Fill in the surplus-shortage column (gray-shaded cells).

Refer to the table below. Fill in the surplus-shortage column (gray-shaded cells).Thousands of Bushels DemandedPrice per BushelThousands of Bushels SuppliedSurplus (+) or Shortage (-)88$3.4065813.7071754.0075704.3078664.6080634.9081a. What is the equilibrium price in this market? At what price is there neither a shortage nor a surplus?b. Graph the demand for wheat and the supply of wheat. Be sure to locate the equilibrium price and quantity. c. How big is the surplus or shortage at $3.40? There is a _______ of _______ thousands of bushels How big...

Question