Figure: Price Adjustment Refer to the figure. If the price of the product is $14, there is a:
A) shortage of 30 units of the product, and the price will rise to $16.
B) surplus of 20 units of the product, and the price will rise to $16.
C) shortage of 50 units of the product, and the price will rise to $16.
D) surplus of 40 units of the product, and the price will rise to $16.

Question

Figure: Price Adjustment  Refer to the figure. If the price of the product is $14, there is a:
A) shortage of 30 units of the product, and the price will rise to $16. 
B) surplus of 20 units of the product, and the price will rise to $16. 
C) shortage of 50 units of the product, and the price will rise to $16. 
D) surplus of 40 units of the product, and the price will rise to $16.

Quizplus · Accepted Answer

At a price of $14, the quantity demanded is 60 and the quantity supplied is only 10, resulting in a shortage of 50 units. The shortage will cause an increase in the price of the product to $16, which will then result in a quantity supplied of 60 and a quantity demanded of 70, eliminating the shortage. Therefore, choice C is the correct answer.

Figure: Price Adjustment Refer to the Figure