Economics 9708 · AS & A Level · Income elasticity of demand

Income elasticity of demand — practice question

The demand for a product is represented by QD = 400 – 10P, where P denotes the price in dollars. The supply of the product is held constant at 100 units. If the price is $20, what will be the market position?

  • AIt will be in disequilibrium with excess demand of 100 units.
  • BIt will be in disequilibrium with excess supply of 100 units.
  • CIt will be in equilibrium with 100 units traded.
  • DIt will be in equilibrium with 200 units traded.

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