Figure: Price Adjustment Refer to the figure. If the price of the product is $14, there is a:
A) shortage of 30 units of the product, and the price will rise to $16.
B) surplus of 20 units of the product, and the price will rise to $16.
C) shortage of 50 units of the product, and the price will rise to $16.
D) surplus of 40 units of the product, and the price will rise to $16.

Question

Figure: Price Adjustment  Refer to the figure. If the price of the product is $14, there is a:
A) shortage of 30 units of the product, and the price will rise to $16. 
B) surplus of 20 units of the product, and the price will rise to $16. 
C) shortage of 50 units of the product, and the price will rise to $16. 
D) surplus of 40 units of the product, and the price will rise to $16.

Quizplus · Accepted Answer

At a price of $14, the quantity demanded would be 60 units while the quantity supplied would only be 10 units, resulting in a shortage of 50 units. With this level of shortage, suppliers would increase the price to $16 to reduce demand and increase supply, ultimately reaching an equilibrium at a quantity of 40 units. Therefore, choice C is the correct answer.

Figure: Price Adjustment Refer to the Figure