Question

The following table presents the demand and supply for one commodity good.

Price (p)	Demand (QD)	Supply (Qs)
300	130	35
400	100	41
500	72	52
600	55	70

(1) If the price is $600, then, ___

(A) Supply > Demand.

2) If the price is $300, then, ___

(A) Supply > Demand.

(B) The price is expected to rise.

(C) We will have a market equilibrium for this product.

(D) There is an excess supply.

(3) The equilibrium price is ___

(A) between $300 and $400.

(B) between $400 and $500.

(C) between $500 and $600.

(D) greater than $600.

Answer 1

1) when price is 600$, demand for one commodity is 55 units and supply for the same commodity is 70 units.

Hence, option A is correct that is supply is greater than demand when price is 600$.

2) when price is 300$, demand for one commodity is 130 units and supply for the same is 35 units.

Hence, option B is correct that is the prices are expected to rise to reach at equilibrium point.

3) The equilibrium point is determined when demand equals to supply. And in the given table, demand equals to supply when price is between $500 and $600.

Hence, option C is correct.