Figure 3.12 Alt text for Figure 3.12: In figure 3.23, a graph plotting intersecting supply and demand curves represents the market for coffee grinders.
Long description for Figure 3.12: 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 3.12.The figure above represents the market for coffee grinders.Assume that the market price is $21.Which of the following statements is true?
A)There is a shortage that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25.
B)There is a shortage that will cause the price to increase; quantity supplied will then decrease and quantity demanded will increase until the price equals $25.
C)There is a shortage that will cause the price to increase; demand will then decrease and supply will increase until the price equals $25.
D)There is a shortage that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25.

Question

Figure 3.12  Alt text for Figure 3.12: In figure 3.23, a graph plotting intersecting supply and demand curves represents the market for coffee grinders.
Long description for Figure 3.12: 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 3.12.The figure above represents the market for coffee grinders.Assume that the market price is $21.Which of the following statements is true?
A)There is a shortage that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25. 
B)There is a shortage that will cause the price to increase; quantity supplied will then decrease and quantity demanded will increase until the price equals $25. 
C)There is a shortage that will cause the price to increase; demand will then decrease and supply will increase until the price equals $25. 
D)There is a shortage that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25.

Quizplus · Accepted Answer

At the market price of $21, quantity demanded is higher than quantity supplied, which creates a shortage. Therefore, the price will increase to $25, causing quantity demanded to decrease and quantity supplied to increase until equilibrium is reached. This is represented by moving along the demand curve to the left and along the supply curve to the right until they intersect at the equilibrium point of (50,25). Choice A correctly identifies this process.

Figure 312 Alt Text for Figure 3