Refer to the above diagram. A price of $20 in this market will result in:

EC25

Question

Refer to the above diagram. A price of $20 in this market will result in:

EC25

BlackTom AI · Accepted Answer

Restating the scenario: The question asks what happens at a price of $20 in the shown market diagram.

Option context: The provided answer suggests there is a shortage of 100 units when the price is $20. Since there are no listed alternative choices in the prompt, I will explain why a shortage occurs at this price and estimate the magnitude using the graph.

Step-by-step analysis:
- First, identify the market-clearing (equilibrium) price and quantity from the diagram. The intersection of the demand and supply curves appears around a price of $40 and a quantity of about 150 units. This is the equilibrium point where Qd = Qs.
- Next, consider what happens when the price is set at $20, which is below the equilibrium price. At prices below equilibrium, consumers demand more than what producers are willing to supply, creating a shortage.
- To estimate the size of the shortage at $20, read the quantities from the graph:
  - Quantity demanded at price $20: From the demand curve, the quantity demanded is higher than 150 units, roughly around 180 units (the exact value depends on the scale but it is clearly the larger quantity shown at that price level).
  - Quantity supplied at price $20: From the supply curve, the quantity supplied is lower than 150 units, roughly around 80 units (the exact value depends on the scale but it is clearly the smaller quantity shown at that price level).
- The shortage magnitude is the difference between quantity demanded and quantity supplied: about 180 − 80 ≈ 100 units.

Why this matches the given answer: Since price $20 is below equilibrium, the market cannot supply enough to meet the higher demand, producing a shortage. The approximate gap of 100 units aligns with the visualization on the graph where the demand quantity at $20 markedly exceeds the corresponding supply quantity.

Why other interpretations would be wrong: If one assumed the price at $20 equates supply with demand, that would imply the price is at equilibrium, which contradicts the drawn intersection around $40. If one claimed there is a surplus at $20, that would require quantity supplied to exceed quantity demanded, which is not the case at a price below equilibrium. Finally, presenting any other numeric gap would misread the graph; the closest and intended magnitude shown by the graph is a 100-unit shortfall.

20250616A Unit 1 Homework

Refer to the above diagram. A price of $20 in this market will result in: EC25

View Explanation

Log in for full answers

Similar Questions

Price decreases for a product are most likely to occur when

Assume that a competitive industry producing a normal good is in long-run equilibrium. If average consumer income decreases, which of the following changes will occur?

Which of the following describes how a market will respond when the scarcity of a good increases?

Assume that consumers consider popcorn and pretzels to be substitutes. A significant decrease in the supply of popcorn will affect the pretzel market by

In the coffee market, which of the following changes will increase the price and decrease the quantity of coffee?

At an initial equilibrium, demand curve shifts to the left, supply curve remain unchanged. This creates and prices will _ restore the market equilibrium.

At an initial equilibrium, supply curve shifts to the left, demand curve remain unchanged. This creates and prices will _ restore the market equilibrium.

Due to the Covid-19 Pandemic, the demand for face masks and sanitizers have greatly increased which also increased the price for these products by 50%. Which of the following statements is true?

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler