The following figure shows the demand and supply curves for USB flash drives at different price levels. D is the demand curve, and S₁ is the initial supply curve.

-Refer to the figure above.When the demand curve for flash drives is D and the supply curve of flash drives is S₁,what is the surplus in the market if the price is $7?

Question

The following figure shows the demand and supply curves for USB flash drives at different price levels. D is the demand curve, and S₁ is the initial supply curve.
 
-Refer to the figure above.When the demand curve for flash drives is D and the supply curve of flash drives is S₁,what is the surplus in the market if the price is $7?

Quizplus · Accepted Answer

To find the surplus in the market, we need to first find the equilibrium price where the demand and supply curves intersect. In this case, the equilibrium price is around $5, where the quantity demanded equals the quantity supplied.

However, the question asks for the surplus at a price of $7, which is above the equilibrium price. At a price of $7, the quantity supplied exceeds the quantity demanded, creating a surplus.

To find the surplus, we need to find the difference between the quantity supplied and the quantity demanded at the price of $7. From the graph, we can see that at a price of $7, the quantity supplied is 100 units and the quantity demanded is 50 units. Therefore, the surplus is:

Surplus = Quantity supplied - Quantity demanded
Surplus = 100 - 50
Surplus = 50 units

Therefore, the best choice is C, 50 units.

The Following Figure Shows the Demand and Supply Curves for USB