In the diagram above, there is an excess
...
In the diagram above, there is an excess
Demand for 30 units
Supply of 40 units
Demand for 20 units
Supply of 20 units
Correct answer is B
Excess demand occured when 40 units were supplied. This is because, at this point, the demand was the same as at when 20 units was supplied. Therefore supplying 40 units when the maximum demand by the market is 20, would lead to excess supply.
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