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:

Framing

The way information is presented so as to emphasize either a potential gain or a potential loss as the outcome.

Representativeness Heuristic

is a cognitive shortcut where the likelihood of an object belonging to a category is assessed based on its similarity to a typical case from that category.

Heuristics

Mental shortcuts or rules of thumb that ease the cognitive load of making a decision, often leading to approximation or educated guesses.

Algorithms

Step-by-step procedures or formulas for solving problems or completing tasks.