Suppose That the Demand and Supply Curves in the Market

question 50

Multiple Choice

Suppose that the demand and supply curves in the market for apples have the following functional form: Q_D = 250 - 4p and Q_S = 10 + p.If the prevailing price on the market is 50,then

• A)the market is clearing.
• B)the market exhibits an excess supply of 10 units.
• C)the market exhibits an excess supply of 240 units.
• D)the market exhibits an excess demand of 10 units.
• E)the market exhibits an excess demand of 240 units.

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Definitions:

Horizontal Differentiation

Products differ in ways that make them better for some people and worse for others.

Vertical Differentiation

A product difference that, from everyone’s perspective, makes a product better than rival products.

Vertical Differentiation

A market condition in which products are differentiated based on quality and features, where the products are ranked from best to worst by consumers.

Better Perspective

An improved or more comprehensive way of looking at or understanding a situation or concept.