Question 1:

Suppose that the equilibrium price of eggs is $1.79 per dozen. This means that

1. there is excess supply of eggs at a price above $1.79 and excess demand below that price.

2. there is excess demand for eggs at a price above $1.79 and excess supply below that price.

3. the excess demand equals the excess supply at a price of $1.79.

4. the above are all false because, simply put, supply equals demand at a price of $1.79.

Choose the option that yields the correct answer.