Questions: The equilibrium price in this market occurs at point If the price was set by law at a, the result would be If the price was set by law at c, the result would be

The equilibrium price in this market occurs at point
If the price was set by law at a, the result would be
If the price was set by law at c, the result would be

Transcript text: The equilibrium price in this market occurs at point $\square$ If the price was set by law at a, the result would be $\square$ If the price was set by law at $c$, the result would be $\square$

Solution

Solution Steps

Step 1: Identify the Equilibrium Price

The equilibrium price is where the supply (S) and demand (D) curves intersect. In the graph, this occurs at point (f, b).

Step 2: Determine the Result if Price is Set at 'a'

If the price is set at 'a', which is above the equilibrium price, the quantity supplied (point g) will be greater than the quantity demanded (point d). This results in a surplus.

Step 3: Determine the Result if Price is Set at 'c'

If the price is set at 'c', which is below the equilibrium price, the quantity demanded (point h) will be greater than the quantity supplied (point e). This results in a shortage.