A. In the latte market, demand often exceeds supply and supply sometimes exceeds demand. B. The price of a latte rises and falls in response to changes in supply and demand. In which of these two statements are the concepts of supply and demand used correctly? A) Statement A because demand and supply intersect; they do not exceed each other. B) Statement B because demand and supply intersect; they do not exceed each other. C) Statement A because a new intersection of the two curves will lead to changes in the equilibrium quantity and price of lattes. D) Statement B because a new intersection of the two curves will not lead to changes in the equilibrium quantity and price of lattes.

Question

Business

Adan Mercer

2 February, 14:33

A. In the latte market, demand often exceeds supply and supply sometimes exceeds demand. B. The price of a latte rises and falls in response to changes in supply and demand. In which of these two statements are the concepts of supply and demand used correctly? A) Statement A because demand and supply intersect; they do not exceed each other. B) Statement B because demand and supply intersect; they do not exceed each other. C) Statement A because a new intersection of the two curves will lead to changes in the equilibrium quantity and price of lattes. D) Statement B because a new intersection of the two curves will not lead to changes in the equilibrium quantity and price of lattes.

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Oliver · Answer 1

Option B.

Statement B because demand and supply intersect; they do not exceed each other

Explanation:

This is because in statement A equilibrium is not attained as demand exceeds supply and supply may also exceed demand. In statement B, changes in supply and demand is causing changes in prices. Thus, new equilibrium will be attained and prices adjusting to attain equilibrium and remove excess demand or excess supply.