Exhibit 5-2 $50 0am, 8am Number of Classroom Seats 32. Refer to Exhibit 5-2. If

Question

Exhibit 5-2 $50 0am, 8am Number of Classroom Seats 32. Refer to Exhibit 5-2. If the tuition is set at $60 there will be a. a shortage at 10 a.m, and a surplus at 8 a.m. b. a surplus at 10 am. and a shortage at 8 a.m. c. equilibrium at both 10 a.m. and 8 a.m. because the price is half-way between their individual equilibria. . d. none of the above 33. To an economist, freeway congestion is a sign that the price to drive on the freeway is a. below its equilibrium level. b. at its equilibrium level. c. above its equilibrium level. d. either a or c e. none of the above at

Explanation / Answer

32) a is correct

Price 60 is higher than equilibrium price for tuition at 8am. Increase in price decreases quantity demanded which creates surplus. But price 60 is lower than equilibrium price for tuition at 10 am. Decrease in Price leads to increase in quantity demanded creating a shortage.

33) a is correct

Freeway congestion is an indication of excess demand which happens at a price lower than equilibrium price.

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