In a given market, the market equilibrium price and quantity are $120

Question

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 shortage of 0.2 million units
a shortage of 0.2 million units

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

a surplus of 0.4 million units
a surplus of 0.4 million units

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

Answer 1

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

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

Now, we can calculate the difference:

• Quantity demanded - Quantity supplied = 5.2 million - 4.8 million = 0.4 million units

Since the quantity demanded (5.2 million) is greater than the quantity supplied (4.8 million), there is a shortage.

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

The correct answer is: a shortage of 0.4 million units.