Economics (AS & A Level) · May / June 2021 · Paper 12 · Question 8
9708Price elasticity, income elasticity and cross elasticity of demand
A market is in equilibrium with 100 units of the product sold at a price of US$10 each. The price elasticity of supply for the product is +2.0 and the price elasticity of demand is –1.0. What will be the state of the market if a minimum price of US$11 is imposed?
- Aan excess demand of 10 units
- Ban excess demand of 30 units
- Can excess supply of 20 units
- Dan excess supply of 30 units
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Correct answer: D. an excess supply of 30 units
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