Figure 3-6

-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?
A)There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25.
B)There is a surplus that will cause the price to decrease; quantity supplied will then increase and quantity demanded will decrease until the price equals $25.
C)There will be a surplus that will cause the price to decrease; demand will then increase and supply will decrease until the price equals $25.
D)There is a surplus that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25.

Question

Figure 3-6
 
-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?
A)There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25. 
B)There is a surplus that will cause the price to decrease; quantity supplied will then increase and quantity demanded will decrease until the price equals $25. 
C)There will be a surplus that will cause the price to decrease; demand will then increase and supply will decrease until the price equals $25. 
D)There is a surplus that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25.

Quizplus · Accepted Answer

When there is a surplus, the price tends to decrease. As the price decreases, the quantity demanded increases and the quantity supplied decreases until equilibrium is reached at $25.

Figure 3-6 -Refer to Figure 3-6.The Figure Above Represents the Market for Represents