Question

If the price is above the equilibrium level, would you predict a surplus or a shortage? If the price is below the equilibrium level, would you predict a surplus or a shortage? Why?

Short answer

If the expenditure is above the equilibrium level, the quantity provided will exceed the quantity required, so there will be remains. If the expense is below the equilibrium level, the quantity required will surpass the quantity provided, so there will be a deficiency.

Step-by-step solution

Concept introduction

The equilibrium cost in a market for a product is an important piece of knowledge to understand when operating an industry.

Explanation

Demand equilibrium usually occurs inherently and it is important to handle supply and market to decrease expenses and raise gains.