If the price is $10
A. there would be a surplus of 200 units.
B. there would be a shortage of 600 units.
C. there would be a shortage of 200 units.
D. there would be a surplus of 600 units.
The correct answer and explanation is:
To provide the correct answer, we need more context—specifically, information about the supply and demand at the price of $10. However, since you are asking for a multiple-choice response and a 300-word explanation, I’ll explain how to arrive at the answer assuming a typical market situation.
Correct Answer (Assumed):
A. There would be a surplus of 200 units. (Assuming supply > demand at $10)
Explanation:
In economics, the concepts of supply and demand determine how prices affect the quantity of goods sold and bought. Here’s how it works:
- Quantity Supplied (Qs) is the amount producers are willing to sell at a given price.
- Quantity Demanded (Qd) is the amount consumers are willing to buy at that price.
When price = $10, we must compare Qs and Qd.
- If Qs > Qd, there is a surplus: more goods are available than buyers want.
- If Qd > Qs, there is a shortage: not enough goods are available to meet consumer demand.
- If Qs = Qd, the market is in equilibrium.
Let’s assume that:
- At $10, the quantity supplied is 800 units, and
- The quantity demanded is 600 units.
This means:
- 800 (supplied) – 600 (demanded) = 200 unit surplus
That would match Option A: “There would be a surplus of 200 units.”
Why this happens:
At higher prices, producers are encouraged to supply more, while consumers buy less. This mismatch creates a surplus—goods accumulate because they remain unsold.
In real-world terms, imagine a product is priced higher than what most people are willing to pay. Fewer buyers purchase the item, but manufacturers continue to produce more, expecting profits. Over time, unsold goods pile up, signaling the market to lower prices or cut back production.
Conclusion:
Assuming the supply at $10 exceeds demand by 200 units, the correct answer is A. a surplus of 200 units. If you have the actual demand and supply numbers, I can confirm or revise this.