The Table Gives Aggregate Demand and Supply Schedules for a
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question 77

Multiple Choice

$$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Amount of Real Output } \\\text { Demanded }\end{array} & \text { Price Level (Index Value) } & \begin{array} { c } \text { Amount of Real Output } \\\text { Supplied }\end{array} \\\hline \$ 200 & 300 & \$ 500 \\\hline 300 & 250 & 450 \\\hline 400 & 200 & 400 \\\hline 500 & 150 & 300 \\\hline 600 & 100 & 200 \\\hline\end{array}$$ The table gives aggregate demand and supply schedules for a hypothetical economy. If the price level is 250 and producers supply $450 of real output,

• A) a shortage of real output of $150 will occur.
• B) a shortage of real output of $100 will occur.
• C) a surplus of real output of $150 will occur.
• D) neither a shortage nor a surplus of real output will occur.

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Definitions:

Competitive Entrants

New participants in a market who compete against established incumbents, usually introducing new competition or innovation.

Skimming Pricing

A pricing strategy involving setting high prices initially and then gradually lowering them to make the product available to a broader market.

Penetration Pricing

A pricing strategy where the price of a new product is set lower than competitors to quickly gain market share.

Skimming Strategy

A pricing tactic that involves setting a high price for a new product to maximize profits from segments willing to pay more, before lowering the price over time.