Refer to the information provided in Figure 4.2 below to answer the question(s) that follow.
Figure 4.2Refer to Figure 4.2. The market is initially in equilibrium at the intersection of S2 and D, and supply shifts from S2 to S1. Which of the following statements is true?
A. There is no need for price to serve as a rationing device in this case because the new equilibrium quantity is lower than the original equilibrium quantity.
B. The market cannot move to a new equilibrium until there is also a change in supply.
C. Price will still serve as a rationing device causing quantity demanded to rise from 8 to 11 soft pretzels.
D. Price will still serve as a rationing device causing quantity supplied to fall from 8 to 4 soft pretzels.
Answer: C
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