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WAEC Economics 2020 Question 8

Question 8

Price Determination

In Figure 4 above, YZ represents

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

Answer: B (excess supply.)

Explanation

At price P1, above equilibrium, buyers want q1 (Y) but sellers offer q3 (Z): the gap YZ is excess supply.