Suppose the market for the magazine is in equilibrium. Some students insist on raising the cover price by $1 and printing the same quantity. What is likely to happen?
A. The demand for the magazine will go up.
B. There will be a shortage of 150 magazines.
C. There will be a surplus of 100 magazines.
D. The surplus will be greater than their sales.
D. am I correct?
I agree.
No, your answer is not correct. Let me explain.
To determine the likely outcome of raising the cover price of the magazine by $1 while printing the same quantity, we need to analyze the impact on demand and supply in the market.
When the cover price of a magazine is increased, it typically leads to a decrease in demand, meaning fewer people would be willing to purchase the magazine at the higher price. Therefore, option A is unlikely because the demand for the magazine is not likely to go up.
Next, let's consider the supply. Since the quantity being printed remains the same, there will be no change in the supply. The supply curve remains unchanged.
Based on this information, it is likely that the market will experience a surplus rather than a shortage. A surplus occurs when the quantity supplied exceeds the quantity demanded at a given price. In this case, the higher price may result in fewer people buying the magazine, leading to excess supply. Therefore, option C is the most likely answer – there will be a surplus of 100 magazines.
Option D is not a correct answer because it suggests that the surplus will be greater than their sales, which is not necessarily implied by the information provided. The surplus will depend on the extent of the decrease in demand resulting from the price increase.
So, the correct answer is C. There will be a surplus of 100 magazines.