Based on the graph above, calculate excess supply and excess demand to fill in t

Question

Based on the graph above, calculate excess supply and excess demand to fill in the table below. Write "x" for cells that should be left blank.

Suppose that the world price in the market chart above is $2. If this market engages in trade then we would expect consumer surplus to __________, and producer surplus to ___________. Overall we would expect that the total surplus in the market would __________

a: increase/decrease/increase

b: increase/decrease/decrease

c: increase/decrease/no change

d: decrease/increase/increase

e: decrease/increase/decrease

f: decrease/increase/no change

Price Excess Demand Excess Supply $1 $2 $3    $4

Explanation / Answer

c: increase/decrease/no change

Price Excess Demand Excess Supply $1 90 X $2 50 X $3 X X $4 X 100

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