Question

the following graph shows the market for time - stopping watches. suppose the market price is $10 per time - stopping watch. at this price, retailers are willing to sell time - stopping watches, whereas consumers will purchase time - stopping watches. this means there is of time - stopping watches in the market. as a result, sellers will start to price discriminate between buyers based on their incomes. sellers will cut the price of time - stopping watches until the surplus is eliminated. sellers will hold their sales and wait until consumers agree to pay $10 per time - stopping watch. sellers will increase the price of time - stopping watches until the shortage is eliminated.

Explanation:

Step1: Find quantity supplied at $10

On the supply - curve, when the price is $10, find the corresponding quantity on the x - axis. By looking at the supply curve, when $P = 10$, the quantity supplied $Q_s$ is 12.

Step2: Find quantity demanded at $10

On the demand - curve, when the price is $10, find the corresponding quantity on the x - axis. By looking at the demand curve, when $P = 10$, the quantity demanded $Q_d$ is 4.

Step3: Analyze the market situation

Since $Q_s=12$ and $Q_d = 4$, there is a surplus of $Q_s - Q_d=12 - 4 = 8$ watches. In a market with a surplus, sellers will cut the price to sell off the excess inventory until the surplus is eliminated.

Answer:

Retailers are willing to sell 12 time - stopping watches, consumers will purchase 4 time - stopping watches. This means there is a surplus of time - stopping watches in the market. Sellers will cut the price of time - stopping watches until the surplus is eliminated.