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Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Market Equilibrium

Question:

The diagram above at price p* shows the situation of?

Options:

Excess demand

Excess supply

Equilibrium

Both 2 and 3

Correct Answer:

Equilibrium

Explanation:

The correct answer is Option 3: Equilibrium

It can be clearly seen that at price p*, there is equilibrium in the market with market demand and supply curve intersecting each other. But at price pf, supply is greater than demand, indicating a situation of excess supply.

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