question archive If, at a good's current price, the quantity demanded is 5,000 units and the quantity supplied is 10,000 units then: a) The current price is below the equilibrium price, b) Producers are not responsive to price changes, c) The current price is above the equilibrium price, d) Consumers of this particular item do not buy less of it when its price increases
If, at a good's current price, the quantity demanded is 5,000 units and the quantity supplied is 10,000 units then: a) The current price is below the equilibrium price, b) Producers are not responsive to price changes, c) The current price is above the equilibrium price, d) Consumers of this particular item do not buy less of it when its price increases
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If, at a good's current price, the quantity demanded is 5,000 units and the quantity supplied is 10,000 units then:
a) The current price is below the equilibrium price,
b) Producers are not responsive to price changes,
c) The current price is above the equilibrium price,
d) Consumers of this particular item do not buy less of it when its price increases.
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The correct answer to the given question is option c) The current price is above the equilibrium price.
For a given good or service, the quantity supplied is usually directly related to its price while the quantity demanded is inversely related to its price. Hence, at prices lower than the equilibrium price, the quantity demanded is more than the quantity supplied. On the other hand, at prices higher than the equilibrium price, the quantity supplied is more than the quantity demanded. Since in the given scenario, the quantity demanded of 5,000 units is less than the quantity supplied of 10,000 units, it can be inferred that the current price is above the equilibrium price.
