Question

Use the graph to answer the question that follows. Graph has quantity along the horizontal axis and price along the vertical axis. An upward-sloping line in the graph is labeled S. A point on line S is labeled 100 dollars along the vertical axis and 100 units along the horizontal axis. What happens to the total quantity supplied when the price of the product drops below $100? It will be more than 100 units. It will be less than 100 units. It will be exactly 100 units. It will be exactly 0 units.

Answer 1

The effect on the total quantity supplied if the price of the product drops below $100 is It will be less than 100 units.

What happens when prices drop below equilibrium?

When prices drop below the equilibrium price then the quantity supplied will decrease while the quantity demanded will increase.

This is because suppliers will be making less money with the lower price and so will supply less goods to the market. This is what will happen to the quantity supplied if the price falls below $100.

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