Refer to Figure 3-4.(attached) The figure represents the market for canvas tote

Question

Refer to Figure 3-4.(attached) The figure represents the market for canvas tote bags. Assume that the price of tote bags is $15. At this price:

a. the quantity demanded exceeds the quantity supplied of tote bags by 75. The price
will eventually rise to $25 where quantity demanded will equal quantity supplied.

b. there is a shortage, equal to 55 tote bags; the price of tote bags will rise until demand
is equal to supply.

c. the demand exceeds the supply of tote bags by 55. Some consumers will have an
incentive to offer to buy tote bags at a higher price.

d. there is a shortage, equal to 55 tote bags, that will be eliminated when the price rises
to $25.

Explanation / Answer

Answer is choice D

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