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 exceeds the quantity supplied by 50 units (point A). This creates a shortage in the market, and suppliers will be incentivized to raise the price in order to increase their profits. The equilibrium price, where quantity supplied equals quantity demanded, is $16 (point B). Therefore, the price will rise to $16 in order to eliminate the shortage.

Figure: Price Adjustment Refer to the Figure