Measuring Excess Supply in Market Disequilibrium

Steps:

• Locate price P on the supply-demand graph; assume P exceeds equilibrium price, causing surplus.
• Determine quantity demanded (QD) at P, typically the smaller quantity like Q1.
• Determine quantity supplied (QS) at P, typically the larger quantity like Q4.
• Calculate disequilibrium extent as excess supply: QS - QD = Q4 - Q1.

Why D is correct:

• Disequilibrium at a price above equilibrium is quantified by excess supply (QS - QD), per basic supply-demand model, matching Q4 (QS) minus Q1 (QD).

Why the others are wrong:

• A: Q1 - Q2 understates surplus; Q2 likely irrelevant to QD/QS at P.
• B: Q2 - Q3 confuses intermediate quantities, not tied to actual QD/QS difference.
• C: Q3 - Q4 reverses supply-demand mismatch, implying shortage instead of surplus.

Final answer: D