When Demand Increases and the Demand Curve Shifts to the Right

question 2

Multiple Choice

When demand increases and the demand curve shifts to the right, equilibrium price ________ and equilibrium quantity ________.

• A) increases; increases
• B) increases; decreases
• C) decreases; increases
• D) decreases; decreases

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Definitions:

Cost Data

Information related to the expenses incurred in the production of goods or services, including materials, labor, and overhead costs.

Purely Competitive Producer

A firm operating in a market where there are many sellers and buyers, the product is homogeneous, and there are no barriers to entering or exiting the market.

Shutting Down

The temporary or permanent cessation of operations, particularly referring to a firm's decision when it cannot cover its variable costs.

Economic Profits

The difference between total revenue and total cost, including both explicit and implicit costs, indicating a profit beyond normal expectations.