Introduction to Economics 1 Deneme Sınavı Sorusu #590147
Which of the following statements is true regarding the market equilibrium graph above?
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The price of the product increases because of changes in demand. |
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The supply of the product increases despite the fall in the demand. |
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The demand for the product decreases because of high prices. |
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The price of the product decreases despite the fall in the supply. |
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The supply of the product decreases because of a fall in prices. |
In our sample graph, the demand curve shifts to the right (from D0 to D1), so it illustrates the change in market equilibrium when the demand shifts. The graph shows that the market is initially in equilibrium at point E. When the demand increases, the demand curve shifts to the right and a new equilibrium is established in the intersection of the new demand curve and supply curve at point F. This point is characterized by a new price and a new quantity representing both demand and supply. This new price is of course higher than the initial price. The correct answer is A.
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