Question

on a supply-and-demand diagram, consider a price for which the horizontal distance to the demand curve exceeds the horizontal distance to the supply curve. there is a __________ at that price and the current price must be __________ the equilibrium price.

A-Shortage, above

B-Shortage, below

C-Surplus, above

D-Surplus, below

Answer 1

Answer is -

A-Shortage, Above.

on a supply-and-demand diagram, consider a price for which the horizontal distance to the demand curve exceeds the horizontal distance to the supply curve. there is a Shortage at that price and the current price must be Above the equilibrium price.

Explanaiton -

See as per Elasticityof Demand and Supply, if consider Suppy and Demand Diagram, If consider a price for which horizontal distance to the Demand curve exceeds- here simply at a specific price demand of products incresing that's why Demand Curve Exceeds And it create Shortage of Products in market due to high demand.

And When demand curve exceeds means consumer demand is also increases that's why Price of product little more increases than Equilibrium. due to insufficiant supply of product.  And current Price must be above the Equilibrium price.