In a given market, the market equilibrium price and quantity are $120 and 5 million units, respectively. At a price of $100 , 4.8 million units are supplied, and 5.2 million units are demanded. It can be said that at a price level of $100 there is a _____.(1 point)

Responses

a surplus of 0.2 million units
a surplus of 0.2 million units

a shortage of 0.4 million units
a shortage of 0.4 million units

a shortage of 0.2 million units
a shortage of 0.2 million units

a surplus of 0.4 million units

1 answer

To determine whether there is a surplus or shortage at the price level of $100, we can compare the quantity supplied and the quantity demanded at that price:

  • Quantity supplied at $100: 4.8 million units
  • Quantity demanded at $100: 5.2 million units

Now, we can calculate the difference between quantity demanded and quantity supplied:

\[ \text{Quantity demanded} - \text{Quantity supplied} = 5.2 \text{ million units} - 4.8 \text{ million units} = 0.4 \text{ million units} \]

Since the quantity demanded is greater than the quantity supplied at this price, there is a shortage.

Thus, at a price level of $100, there is a shortage of 0.4 million units.

The correct response is:

a shortage of 0.4 million units.