Figure 3.6 Alt text for Figure 3.6: In figure 3.6, a graph of intersecting supply and demand curves illustrates shortage and surplus in a market, along with its equilibrium.
Long description for Figure 3.6: The x-axis is labelled, Quantity, with the values 0, 200, 400, 500, 600, 700 and 800 marked.The y-axis is labelled, Price, with the values 0, 10.00, 15.00, 20.00 and 25.00 dollars marked.Curve Supply S is a straight line which slopes up from the bottom left corner to the top right corner.4 points are plotted along the curve; (200, 10), (400, 15), (600, 20), and (800, 25).Demand curve D is a straight line which slopes down from the top left corner to the bottom right corner.Curve D intersects the S curve at (600, 20), and passes through another point, (800, 10).All plotted points are connected to the corresponding values on the x and y-axis with dotted lines.
-Refer to Figure 3.6.If the current market price is $10, the market will achieve equilibrium 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 3.6  Alt text for Figure 3.6: In figure 3.6, a graph of intersecting supply and demand curves illustrates shortage and surplus in a market, along with its equilibrium.
Long description for Figure 3.6: The x-axis is labelled, Quantity, with the values 0, 200, 400, 500, 600, 700 and 800 marked.The y-axis is labelled, Price, with the values 0, 10.00, 15.00, 20.00 and 25.00 dollars marked.Curve Supply S is a straight line which slopes up from the bottom left corner to the top right corner.4 points are plotted along the curve; (200, 10), (400, 15), (600, 20), and (800, 25).Demand curve D is a straight line which slopes down from the top left corner to the bottom right corner.Curve D intersects the S curve at (600, 20), and passes through another point, (800, 10).All plotted points are connected to the corresponding values on the x and y-axis with dotted lines.
-Refer to Figure 3.6.If the current market price is $10, the market will achieve equilibrium 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

At the current market price of $10, there is a surplus of goods which will lead to a decrease in price. As the price decreases, quantity demanded will increase and quantity supplied will decrease until the market reaches equilibrium. This can only be achieved through a price increase which increases the quantity supplied and decreases the quantity demanded. Therefore, the correct choice is D.

Figure 36 Alt Text for Figure 3