The demand function for a good is QD = 2000 − 125P and its supply function is QS = −400 + 75P. At a price of $10, the market for this good exhibits: A. an equilibrium. B. excess demand. C. excess supply.
At P = $10, QD = 2000 − 125(10) = 750 and QS = −400 + 75(10) = 350. Quantity demanded is greater than quantity supplied at this price, so the market exhibits excess demand.
