Given the Following Supply and Demand Curves for Six-Packs of Beer

question 6

Multiple Choice

Given the following supply and demand curves for six-packs of beer, a price of $5.00 would produce:
Demand Q = 31,000 - 2000P
Supply Q = 10,000 + 1500P

• A) equilibrium.
• B) a shortage of 3,500 six-packs of beer.
• C) a surplus of 3,500 six-packs of beer.
• D) a shortage of 21,000 six-packs of beer.
• E) a surplus of 17,500 six-packs of beer.

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Definitions:

Potential Output

Potential output refers to the total amount of goods and services an economy can produce when it is operating at full capacity and efficiency, without causing inflation.

Long-run Equilibrium

A state in which all inputs and outputs in an economy are fully adjusted and there is no tendency for change.

Aggregate Supply

The total supply of goods and services that firms in an economy are willing to sell at a given overall price level, across all existing price levels.

Long-run Aggregate Supply

The total supply of goods and services that an economy can produce when resources are fully employed at their most efficient levels, without inflation.