At $8, quantity demanded is 600 and quantity supplied is 900. What is the size of the surplus, and which way will price move?

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Question

At $8, quantity demanded is 600 and quantity supplied is 900. What is the size of the surplus, and which way will price move?

Accepted Answer

300 units, and price will fall — Award 1 mark. The surplus is supply minus demand: 900 − 600 = 300 units. Unsold stock leads sellers to cut prices until the market clears. A surplus pushes price down, not up, 1,500 adds the two figures, and the price will not stay put while goods go unsold.

Answer

600 units, and price will stay at $8

Answer

300 units, and price will rise

Answer

300 units, and price will fall

Answer

1,500 units, and price will fall

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