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JAMB Economics 2008 Question 19

Question 19

Price Determination

In the diagram above, there is an excess

Diagram for this question
  1. A.demand for 30 units
  2. B.supply of 40 units
  3. C.demand for 20 units
  4. D.supply of 20 units
Show the answer and explanation

Answer: D (supply of 20 units)

Explanation

At the price shown, which is above equilibrium, buyers take 20 units but sellers offer 40, giving an excess supply of 40 − 20 = 20 units.