Figure 3.11 Alt text for Figure 3.11: In figure 3.11, a graph plotting intersecting supply and demand curves illustrates how supply and demand function in competitive markets.
Long description for Figure 3.11: The x-axis is labelled, Quantity, and is marked from 0 to 8 in increments of 2.The y-axis is labelled, Price, and is marked from 0 to 20 dollars in increments of 5.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 marked at (4,10).2 points plotted on the demand curve to the left of the equilibrium are (0,20)and (2,15).2 points plotted on the demand curve to the right of the equilibrium are (6,5)and (8,0).2 points plotted on the supply curve to the right of the equilibrium are (6,15)and (8,20).2 points plotted on the supply curve to the left of the equilibrium are (2,5)and (0,0).
-Refer to Figure 3.11.In a free market such as that depicted above, a shortage 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 3.11  Alt text for Figure 3.11: In figure 3.11, a graph plotting intersecting supply and demand curves illustrates how supply and demand function in competitive markets.
Long description for Figure 3.11: The x-axis is labelled, Quantity, and is marked from 0 to 8 in increments of 2.The y-axis is labelled, Price, and is marked from 0 to 20 dollars in increments of 5.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 marked at (4,10).2 points plotted on the demand curve to the left of the equilibrium are (0,20)and (2,15).2 points plotted on the demand curve to the right of the equilibrium are (6,5)and (8,0).2 points plotted on the supply curve to the right of the equilibrium are (6,15)and (8,20).2 points plotted on the supply curve to the left of the equilibrium are (2,5)and (0,0).
-Refer to Figure 3.11.In a free market such as that depicted above, a shortage 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 shortage is eliminated by increasing the quantity supplied and decreasing the quantity demanded. This can be achieved by a price increase, which incentivizes producers to supply more and consumers to demand less, ultimately leading to the equilibrium point on the supply and demand graph. Therefore, the best choice is D, a price increase, increasing the quantity supplied and decreasing the quantity demanded.

Figure 311 Alt Text for Figure 3