As a falling price eliminates a surplus in the jersey market, A. consumers incre

Question

As a falling price eliminates a surplus in the jersey market,
A. consumers increase the quantity of jerseys they demand.
B. the demand curve for jersey shifts rightward and the supply curve of jerseys shift leftward.
C. producers decrease the quantity of jerseys they supply and buyers decrease the quantity of jerseys they supply and buyers decrease the quantity of jerseys they demand.
D. Producers increase the quantity of jerseys they supply.
E. The demand curve for jerseys shifts leftward and the supply curve of jerseys shifts rightward.

Explanation / Answer

A surplus means that supply is greater than demand. This implies that a falling price will move the market toward equilibrium. Before we look at the answer, realize that no curves are shifting. A shift in demand means that consumers preferences change. A shift in supply means that producer costs change. Neither of these things are happening. So, we can immediately eliminate any answer that involves shifting a curve. This means, we eliminate answers B and E. Let's evaluate the remaining answers. A. This answer is correct. As prices fall, people will buy more. Think about it. If the price of a jersey falls, that's going to make you buy more jerseys. But let's look at the other answers to make sure this is the best answer. C. This is incorrect. As the price falls, producers will decrease the quantity supplied but buyers will increase the quantity demanded. Think about it. If you're selling jersies and the price decreases, that's going to make you want to sell less of them. But if you are a consumer of jersies, then you will want to buy more. The first part of this answer is correct, but the second part is incorrect. So, this is not the correct answer. D. is incorrect for the same reason that the first part of C was correct. If the price falls, supplies are going to want to sell fewer jersies, not more. A is the correct answer.

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