-Refer to Figure 3-6. The figure above represents the market for canvas tote bags. Assume that the market price is $35. Which of the following statements is true?

Question

Quizplus · Accepted Answer

When there is a surplus in the market, it means that the quantity supplied is greater than the quantity demanded at the current price. This surplus puts downward pressure on the price, leading it to decrease. As the price decreases, the quantity demanded will increase because consumers are more willing to buy the product at lower prices, and the quantity supplied will decrease because producers are less willing to supply the product at lower prices. This process continues until the market reaches equilibrium, where quantity demanded equals quantity supplied, which is suggested to be at $25 in this scenario.