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WAEC Economics 2004 Question 16

Question 16

Price Determination

The gap between demand and supply curves below the equilibrium price indicates

  1. A.excess demand
  2. B.excess supply
  3. C.equilibrium quantity
  4. D.equilibrium price
Show the answer and explanation

Answer: A (excess demand)

Explanation

Below equilibrium price, quantity demanded exceeds quantity supplied, giving excess demand (a shortage).