Figure 3.8 Alt text for Figure 3.8: In figure 3.8, a graph plotting intersecting supply and demand curves represents the market for canvas tote bags.
Long description for Figure 3.8: The x-axis is labelled, Quantity, with the values 0, 10, 20, 50, 75, and 100 marked.The y-axis is labelled, Price, with the values 0, 15, 25, and 50 dollars marked.Curve D is a straight line which slopes down from the top left corner to the bottom right corner.Curve S is a straight line which begins in the bottom left corner and slopes up to the top right corner.The equilibrium of the 2 curves is (50,25).The point plotted on curve S to the left of equilibrium is (20,15).The point plotted on curve D to the right of point of equilibrium is (75,15).The point plotted to the right of equilibrium on curve S is (100,50).The point plotted to the right of the equilibrium on curve D is (10,50).
-Refer to Figure 3.8.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 3.8  Alt text for Figure 3.8: In figure 3.8, a graph plotting intersecting supply and demand curves represents the market for canvas tote bags.
Long description for Figure 3.8: The x-axis is labelled, Quantity, with the values 0, 10, 20, 50, 75, and 100 marked.The y-axis is labelled, Price, with the values 0, 15, 25, and 50 dollars marked.Curve D is a straight line which slopes down from the top left corner to the bottom right corner.Curve S is a straight line which begins in the bottom left corner and slopes up to the top right corner.The equilibrium of the 2 curves is (50,25).The point plotted on curve S to the left of equilibrium is (20,15).The point plotted on curve D to the right of point of equilibrium is (75,15).The point plotted to the right of equilibrium on curve S is (100,50).The point plotted to the right of the equilibrium on curve D is (10,50).
-Refer to Figure 3.8.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

In a market scenario where the price is above the equilibrium, a surplus occurs because the quantity supplied exceeds the quantity demanded at that price. This surplus puts downward pressure on the price, leading to a 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 the quantity demanded equals the quantity supplied, which, according to the statement, is at $25.

Figure 38 Alt Text for Figure 3