= ECON-2010-OL. Macroeconomics 508., A (o Post-test Time Limit: 0:15:00 Time Lef

Question

= ECON-2010-OL. Macroeconomics 508., A (o Post-test Time Limit: 0:15:00 Time Left:0:11:50 Latrease Drake: Attempt 1 Question 3 (10 points) D Figure 4-16 20 Prce 18 16 12 10 102030405060708090 ??nty Refer to Figure 4-16. If price in this market is currently $14, then there would be a(n) surplus of 20 units. The law of supply and demand predicts that the price will rise from $14 to a higher price. surplus of 20 units. The law of supply and demand predicts that the price will fall from $14 to a lower price. surplus of 40 units. The law of supply and demand predicts that the price will rise from $14 to a higher price. surplus of 40 units. The law of supply and demand predicts that the price will fall from $14 to a lower price. Save Question 4 (10 points) Figure 4-16 2o piee 18 16

Explanation / Answer

3.

Correct Answer:

D

At $14 price level,

Demand = 30

Supply = 70

So, surplus = 70-30 = 40 units

Since there is a surplus, then there will be downward pressure upon price.

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