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WAEC Economics 1991 (August) Question 8

Question 8

Theory of Demand

Use the diagram to answer this question.
At price OP2

Diagram for this question
  1. A.demand exceeds supply
  2. B.supply exceeds demand
  3. C.demand equal supply
  4. D.OQ2 is the quantity supplied
  5. E.OQ1 is the quantity demanded.
Show the answer and explanation

Answer: A (demand exceeds supply)

Explanation

OP2 is below the equilibrium price: buyers want ON2 but sellers offer only ON1, so demand exceeds supply.