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 Point A and supply shifts from S1 to S2. Which of the following statements is true?
A. Price will still serve as a rationing device causing quantity supplied to rise from 8 to 11 soft pretzels.
B. The market cannot move to a new equilibrium until there is also a change in supply.
C. There is no need for price to serve as a rationing device in this case because the new equilibrium quantity is higher than the original equilibrium quantity.
D. Price will still serve as a rationing device causing quantity demanded to fall from 11 to 8 soft pretzels.
Answer: D
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