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Read these lines about a market for snowboard jackets: "The equilibrium price is $80; the equilibrium quantity is 700 jackets. If the price increases to $160, suppliers produce more jackets than consumers are willing to buy, and a surplus results. To sell more jackets, prices will have to fall." According to the quoted lines, what must happen for the extra jackets to sell once the price reaches $160?
AThe factories must close early
BThe price must come back down
CThe shoppers must earn raises
DThe jackets must be redesigned
Answer & Solution
Correct answer: B. The price must come back down
1. The quoted lines say that at $160 suppliers make more jackets than buyers want, creating a surplus.
2. The final quoted sentence gives the remedy in plain words: to sell more jackets, prices will have to fall.
3. So the extra jackets sell only when the price comes back down.
4. Closing factories, raising wages, and redesigning jackets are never offered as the fix in the quoted lines.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 1 "Understanding Economic Systems and Business", section 1.6 Microeconomics: Zeroing in on Businesses and Consumers_
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