Price $

Qd

Qs

1

90

20

2

70

30

3

50

50

4

45

80

5

43

120

2. Using the table above, the equilibrium price is

Question

Price $

Qd

Qs

1

90

20

2

70

30

3

50

4

45

80

5

43

120

2. Using the table above, the equilibrium price is

BlackTom AI · Accepted Answer

To approach this, I’ll lay out what each price point implies about the relationship between quantity demanded (Qd) and quantity supplied (Qs).

Option $1: At price 1, Qd is 90 while Qs is 20. That means buyers want to buy a lot more than sellers are offering, creating excess demand. In other words, the market is undersupplied at this price, and pressure would typically push the price upward.

Option $2: At price 2, Qd is 70 and Qs is 30. The gap between demand and supply narrows compared to price 1, but demand still exceeds supply. There is still excess demand, indicating the price would tend to rise to restore balance.

Option $3: At price 3, Qd equals Qs, with both at 50. This is the point where the amount consumers want to buy matches the amount producers are willing to sell. No inherent pressure from excess demand or excess supply exists at this exact price, meaning the market is in balance.

Option $4: At price 4, Qd is 45 while Qs is 80. Here, supply exceeds demand, producing excess supply (a surplus). In typical markets, this would put downward pressure on the price to clear the excess.

Option $5: At price 5, Qd is 43 and Qs is 120. The surplus widens further, with a substantial gap where supply far outstrips demand. The price would generally fall further to eliminate this surplus.

Pulling these observations together, the only price where the quantity demanded equals the quantity supplied is at price 3, since Qd = Qs = 50 there. The other price points illustrate either excess demand (prices 1 and 2) or excess supply (prices 4 and 5), which would drive the market away from those levels toward the balanced point.

Thus, evaluating each option in terms of the relationship between Qd and Qs helps identify where the market clears without surplus or shortage. The equalized point stands out as the equilibrium condition because it shows no inherent pressure for the price to move up or down.

25FAL-ECO-8-48630 Midterm Exam [ Thu, 10/16 by 11:59pm] MODULES[1 TO 5]

Price $ Qd Qs 1 90 20 2 70 30 3 50 50 4 45 80 5 43 120 2. Using the table above, the equilibrium price is

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