Question

Suppose the supply of I-Pods is QS = 10P, while the demand is QD = 3,000 - 5P. Which of following the statements is true? a. If the market price of an I-Pod is $220, there will be a shortage of I-Pods. b. If the market price of an I-Pod is $220, there will be a surplus of I-Pods. c. If the market price of an I-Pod is $200, there will be a shortage of I-Pods. d. If the market price of an I-Pod is $200, there will be a surplus of I-Pods.

Answer 1

Answer: If the market price of an I-Pod is $220, there will be a surplus of I-Pods.

Explanation:

Given :

$Q_{S}$ = 10×P

$Q_{D}$ = 3,000 - 5×P

The equilibrium will occur where supply is equal to demand

i.e. $Q_{S}$ = $Q_{D}$

10P = 3000 - 5P

15P = 3000

P = $200

∴The equilibrium price is $200

Hence, If the market price of an I-Pod is $220, there will be a surplus of I-Pods