Assume the market is in equilibrium in the graph shown at demand D and supply S2 (at a quantity of 6). If the supply curve shifts to S1, and a new equilibrium is reached (at a quantity of 4), which of the following is true?
A. Total surplus would increase by $7.50.
B. Total surplus would decrease by $16.50.
C. Total surplus would increase by $32.
D. Total surplus would decrease by $14.00.
D. Total surplus would decrease by $14.00.
You might also like to view...
The total value of the goods and services produced over a period of time represents an economy’s
a. planned savings. b. total income. c. total wealth. d. capital.
When income increases by 1%, the quantity demanded of a good decreases by 2%. What is the income elasticity of the good? Is the good normal or inferior? Why?
What will be an ideal response?
With moral hazard, fair insurance contracts are not viable because
a. individuals' aversion to risk is reduced. b. insurance company's administrative costs are increased. c. individuals fear unscrupulous agents. d. probabilities of loss are increased over what is expected.
Consider the game tree in Figure 12.8. Compared to the dominant strategy outcome, guaranteed coordination would lead to:
A. higher profits for both stores. B. lower profits for both stores. C. higher profit only for Store A. D. higher profit only for Store B.