Assume a Competitive Market Is in Equilibrium

question 113

Multiple Choice

Assume a competitive market is in equilibrium. There is an increase in demand, but no change in supply. As a result the equilibrium price ________, and the equilibrium quantity ________.

• A) rises; increases
• B) rises; does not change
• C) falls; does not change
• D) falls; increases
• E) falls; decreases

---

Definitions:

Nash Equilibrium

An idea in strategic game theory in which none of the participants can gain by altering their approach if all other players maintain their current strategies.

Solar Water Heaters

Devices that convert sunlight into heat to warm water for residential and commercial uses, promoting energy efficiency.

Nonprice Competition

A strategy where businesses compete on factors other than price, such as quality, service, or brand image.

Product Differentiation

A marketing strategy that businesses use to distinguish their products from those of competitors.