Suppose That Initially, the Equations for Demand and Supply Are

question 82

Multiple Choice

Suppose that initially, the equations for demand and supply are Qd = 48 − 4P and Qs = 4P − 16, respectively. If the quantity supplied increases by 4 at every price (so that the supply curve shifts to the right) , the equilibrium price will change from:

• A) $8 to $7.50.
• B) $8 to $12.
• C) $12 to $8.
• D) $7.50 to $8.

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Definitions:

Permanent Increase

A lasting upward adjustment in size, amount, or value.

Real Output

The quantity of goods and services produced, adjusted for inflation, reflecting the true productivity of an economy.

Inflation Rate

The percentage increase in the price level of goods and services over a period of time, often measured annually.

Government Debt

The total amount of money that a government has borrowed and not yet repaid.