What would be the situation if the price was moved from p2 to p1?
A)
the price would be too low
the price would be dropped
there would be a surplus of widgets
there would be a shortage of widgets
Answer:
there would be a surplus of widgets
Explanation:
1.The price at P1 is $4, and the corresponding demand as per the graph is about 15 units.
2. The current equilibrium price is $2.5, and the demand is bout 30 units.
3. At the price of P1, suppliers are willing to supply up to 50 units to the markets. Should the price move from P2 to P1, demand would decrease from 30 units to between 10 and 15 units. Suppliers, on the other hand, will be willing to supply about 50 units to the market. As a result of the change in price, the quantity supplied will be more than the quantity supplied. As a result, there would be a surplus in the supply of widgets in the markets.
