Macroeconomics is the study of

Refer to Figure 3-6. The figure above represents the market for canvas tote bags. Assume that the market price is $35. Which of the following statements is true?

A) There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25. B) There is a surplus that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25. C) There is a surplus that will cause the price to decrease; quantity supplied will then increase and quantity demanded will decrease until the price equals $25. D) There will be a surplus that will cause the price to decrease; demand will then increase and supply will decrease until the price equals $25.

The fact that travel on buses fell as incomes increased in many cities suggests that

a. bus travel is a normal good b. the law of demand does not apply to bus travel c. bus travel is an inferior good d. there are no good substitute goods for bus travel