Assume the Market in the Graph Is in Equilibrium at Demand

question 96

Multiple Choice

Assume the market in the graph is in equilibrium at demand (D) and supply (S₁) . If supply shifts to S₂, and a new equilibrium is reached, which of the following statements is true?

• A)Consumer surplus increases by $45.
• B)Producer surplus decreases by $45.
• C)Consumer surplus increases by $90.
• D)Total surplus increases by $45.

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Definitions:

Operating Assets

Assets used in the daily operations of a business to generate revenue, such as plant, equipment, inventory, and receivables.

Residual Income

The income that an entity generates after accounting for the cost of capital, showing what is effectively left over for shareholders.

Centralized Organizations

Organizations where decision-making authority is concentrated at the top levels of management, with lower levels primarily responsible for implementing decisions.

Business Segments

Divisions within a company that operate in different types of markets or industries, each with its own specific financial and operational strategies.