Market Surplus at P=$5

Steps:

• Calculate QD at P=5: 400 - 2(5) = 390 units.
• Calculate QS at P=5: 100(5) = 500 units.
• Compare quantities: QS (500) > QD (390), indicating excess supply.
• Equilibrium occurs only when QD = QS, which is not the case here.

Why C is correct:

• Surplus exists when QS > QD, meaning producers supply more than consumers demand at that price.

Why the others are wrong:

• A: Shortage requires QD > QS, but here QD < QS.
• B: No information suggests government intervention.
• D: Market equilibrium requires QD = QS, but 390 ≠ 500.

Final answer: C