00:01
Here we're given a story about markets, so i'm going to replicate this diagram real fast.
00:06
A market is a story about price and quantity.
00:09
We have a downward sloping demand curve starting at 20.
00:12
We have an upward sloping supply curve starting at zero, and we have an equilibrium price at a quantity of four at a price of 10.
00:21
And we have to eliminate a surplus.
00:26
That's what we're told.
00:28
Well, what is a surplus? a surplus in the market is when quantity supplied is greater than quantity demanded, right? we have too many, right? so we have to think about where this is true.
00:43
Well, if we look at the top of the graph, we can say, look at, for example, 15.
00:49
At 15, we have a surplus, right? the quantity demanded is two, while the quantity supplied is six.
00:57
So we have a surplus of four, right, with the quantity supplied being four greater than the quantity demanded...