Figure 3-5

-Refer to Figure 3-5.In a free market such as that depicted above, a surplus is eliminated by
A)a price increase, increasing the supply and decreasing the demand.
B)a price decrease, decreasing the supply and increasing the demand.
C)a price decrease, decreasing the quantity supplied and increasing the quantity demanded.
D)a price increase, increasing the quantity supplied and decreasing the quantity demanded.

Question

Figure 3-5
 
-Refer to Figure 3-5.In a free market such as that depicted above, a surplus is eliminated by
A)a price increase, increasing the supply and decreasing the demand. 
B)a price decrease, decreasing the supply and increasing the demand. 
C)a price decrease, decreasing the quantity supplied and increasing the quantity demanded. 
D)a price increase, increasing the quantity supplied and decreasing the quantity demanded.

Quizplus · Accepted Answer

In a free market, a surplus occurs when the quantity supplied exceeds the quantity demanded at a given price. To eliminate the surplus, the price must decrease, which will decrease the quantity supplied and increase the quantity demanded until equilibrium is reached.

Figure 3-5 -Refer to Figure 3-5.In a Free Market Such as That