Refer to the Diagram Given Below

question 52

Multiple Choice

Refer to the diagram given below. If AD₁ shifts to AD₂, then the equilibrium output and price level are:

• A)P₁ and Q₃.
• B)P₂ and Q₃.
• C)P₁ and Q₂.
• D)P₂ and Q₂.

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Definitions:

Game

A strategic interaction among players, where each one makes decisions by considering the potential choices and outcomes of others.

Rival

A good whose consumption by one person diminishes the quantity or quality available for consumption by others.

Price Leadership

An informal method that firms in an oligopoly may employ to set the price of their product: One firm (the leader) is the first to announce a change in price, and the other firms (the followers) soon announce identical or similar changes.

Oligopoly

An oligopoly is a market structure characterized by a small number of firms dominating the market, where each firm has significant control over prices and other market factors.