Question

13. Which of the following best describes what happens if equilibrium is at $57 and a price moves from $68 to $51?

Group of answer choices

A. surplus to a smaller surplus

B. shortage to a smaller shortage

C. shortage to a surplus

D. surplus to a shortage

Answer 1

First consider the given scenario if price is $68

A price of $68 is higher than equilibrium price. So, quantity supplied will be higher than the quantity demanded. There will be a "surplus" in the market at a price of $68

Now consider the given scenario if price is $51

A price of $51 is lower than equilibrium price. So, quantity supplied will be less than the quantity demanded. There will be a "shortage" in the market at a price of $51

We can see that state of market has moved from "surplus" to "shortage" in the given case.

Correct option is

D. surplus to a shortage