If the price of a video rental is below the equilibrium price, the quantity supplied is __ than the quantity demanded. If the price of video rental is above the equilibrium price, the quantity supplied is _ than the quantity demanded.

greater; less

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greater; greater

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less; greater

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less; less

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Solution

The correct option is C less; greater
When the quantity supplied is equal to the quantity demanded it is called equilibrium point. When the price floor is above the equilibrium price, the quantity supplied will exceed the quantity demanded also will create surplus and vice versa. Hence, if the price of the video rental is blow the equilibrium price, the quantity supplied is less than the quantity demanded and if the price of video rental is above the equilibrium price, the quantity supplied is greater than the quantity demanded.

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Similar questions

Consider the following demand and supply functions for a good.

Quantity demanded = 160 - 2p

Quantity supplied = - 40 + 2p

(i) Calculate the equilibrium price and quantity.

(ii) Find out a price at which there is excess demand.

(iii) Find out a price at which there is excess supply.

The market for a good is in equilibrium. What is the effect on equilibrium price and quantity if the increase in market demand is less than the increase in market supply?

Q. At a price of

R s . 8

per unit, the quantity supplied of a commodity is

200

units. Its price elasticity of supply is

1.5

. If its price rises to

R s . 10

per unit, calculate the quantity supplied at the new price.

Q. The price elasticity of supply of a commodity is

2.5

. At a price of

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per unit, its quantity supplied is

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units. Calculate its quantity supplied at a price of

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per unit.

An increase in demand leads to a decrease in both the equilibrium price and the equilibrium quantity. A decrease in demand leads to a rise in both the equilibrium price and the equilibrium quantity.

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If the price of a video rental is below the equilibrium price, the quantity supplied is __________ than the quantity demanded. If the price of video rental is above the equilibrium price, the quantity supplied is _________ than the quantity demanded.

If the price of a video rental is below the equilibrium price, the quantity supplied is __ than the quantity demanded. If the price of video rental is above the equilibrium price, the quantity supplied is _ than the quantity demanded.