The problem presents a supply and demand graph. We need to determine which of the given statements is correct when the price is $350. The options are: a shortage exists, a surplus exists, the price is an equilibrium point, or the price is a break-even point.

1. Problem Description

The problem presents a supply and demand graph. We need to determine which of the given statements is correct when the price is $

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0. The options are: a shortage exists, a surplus exists, the price is an equilibrium point, or the price is a break-even point.

2. Solution Steps

First, we identify the supply and demand curves. In a standard supply and demand graph, the supply curve slopes upward, and the demand curve slopes downward.

When the price is $350, we look at the quantities supplied and demanded. From the graph, at$p=350$, the quantity demanded (the quantity on the downward-sloping curve) is lower than the quantity supplied (the quantity on the upward-sloping curve).

A shortage occurs when the quantity demanded exceeds the quantity supplied.

A surplus occurs when the quantity supplied exceeds the quantity demanded.

An equilibrium point occurs when the quantity supplied equals the quantity demanded (the intersection of the curves).

Since at a price of $350, the quantity supplied is greater than the quantity demanded, there is a surplus.

3. Final Answer

(B) There is a surplus when the price is $350.