This economics question tests your understanding of economic models and analysis. The step-by-step answer below applies the relevant framework and explains the reasoning.
ScanSolve AI Answer
To determine the state of the market at a price of \12.00, we need to compare the quantity demanded (Q_d) and the quantity supplied (Q_s) at that price. Step 1: Calculate quantity demanded at p = \12.00. The demand equation is Q_d = 1000 - 20p. Q_d = 1000 - 20(12) \\ Q_d = 1000 - 240 \\ Q_d = 760 units Step 2: Calculate quantity supplied at p = \12.00. The supply equation is Q_s = 500 + 30p. Q_s = 500 + 30(12) \\ Q_s = 500 + 360 \\ Q_s = 860 units Step 3: Compare quantity demanded and quantity supplied. At p = \12.00: Q_d = 760 units Q_s = 860 units Since Q_s > Q_d (860 > 760), there is a surplus in the market. The surplus is calculated as: Surplus = Q_s - Q_d \\ Surplus = 860 - 760 \\ Surplus = 100 units The state of the market is a surplus of 100 units. Drop the next question.