Exhibit 3-16 Supply and demand curves for chairs In Exhibit 3-16, if the market price of chairs is initially $15, a movement toward equilibrium would require:

Question

Exhibit 3-16  Supply and demand curves for chairs  In Exhibit 3-16, if the market price of chairs is initially $15, a movement toward equilibrium would require:

Quizplus · Accepted Answer

If the market price of chairs is initially $15 and there is excess supply, suppliers will want to decrease the price to try and sell more chairs. This decrease in price will result in a fall in quantity supplied, as some suppliers will drop out of the market due to the lower price. At the same time, the lower price will make chairs more attractive to consumers, resulting in an increase in quantity demanded. As the quantity supplied falls and the quantity demanded rises, the market will move towards equilibrium. Ultimately, the price will fall below $15, the quantity supplied will fall, and the quantity demanded will rise.

Exhibit 3-16 Supply and Demand Curves for Chairs in Exhibit