Question

use this graph to answer the following questions. in this example, what is occurring within the market? disequilibrium what is there an excess of? what could solve the problem shown in this graph? lower prices higher prices

Explanation:

Step1: Identify market state

The supply and demand curves do not intersect at the current price - quantity combinations, indicating disequilibrium.

Step2: Analyze quantity relationship

At the given price ($P_1$), the quantity supplied is greater than the quantity demanded, so there is an excess of quantity supplied.

Step3: Determine solution

To move towards equilibrium, since there is a surplus, lower prices would increase quantity demanded and decrease quantity supplied, helping to solve the disequilibrium.

Answer:

1. In this example, what is occurring within the market? - disequilibrium
2. What is there an excess of? - quantity supplied
3. What could solve the problem shown in this graph? - lower prices