Refer to Figure 4. The figure above represents the market for canvas tote bags.
ID: 1227322 • Letter: R
Question
Refer to Figure 4. The figure above represents the market for canvas tote bags. Assume that the market price is S35. Which of the following statement is true? There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25. There is a surplus that will cause the price to decrease; quantity supplied will then increase and quantity demanded will decrease until the price equals $25. There will be a surplus that will cause the price to decrease; demand will then increase and supply will decrease until the price equals $25. There is a surplus that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25. Refer to Figure 4. The figure above represents the market for canvas tote bags. Compare the conditions in the market when the price is $50 and when the price is $35. Which of the following describes how the mExplanation / Answer
39.
Correct answer:
A. There is a surplus that will cause the price to decrease, quantity demanded will then increase and quantity supplied will then decrease until the price equals $25.
Explanation:
Market price is $35 and it is higher than the equilibrium price. Thus, there is a downward pressure upon the price. It will lead to the increase in quantity demanded and decrease in quantity supplied so that equilibrium is achieved.
40.
Correct Answer:
B. The difference between quantity supplied and quantity demanded is greater at $50 than at $35.
Explanation:
At higher prices, quantity supplied is higher and quantity demanded is lower. Thus, the difference is bigger at $50 in comparison to $35 price.
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