A television station reports that more people are purchasing personal computers.

Question

A television station reports that more people are purchasing personal computers. A likely explanation for this event would be a(n): Increase in the demand for and the supply of computers Decrease in the demand for and the supply of computers Increase in the supply of computers and a decrease in the demand for computers Decrease in the supply of computers and an increase in the demand for computers Refer to the above diagram. If the price were $1 per gallon, there would be a: Shortage of 8 million gallons Shortage of 10 million gallons Surplus of 10 million gallons Surplus of 8 million gallons

Explanation / Answer

9. Option A is correct.

When more people started buying the computers, the demand curve would shift outwards to the right. Also the supply would increase due to increased demand and the suppy curve would too shift out to the right.

10. Option A is correct.

When the price is less than the equilibrium price, there is an excess demand or shortage of goods. The difference between the demand and upply determines the shortage. Demand = 35 and supply = 27, shortage = 35 - 27 = 8 gallons.

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