(Figure: Price and Quantity I) the Decrease in Supply from S₁

question 42

Multiple Choice

(Figure: Price and Quantity I) The decrease in supply from S₁ to S₂ will cause consumer surplus to _____ and producer surplus to _____.

• A) decrease by $10.50; decrease by $4.50
• B) decrease by $5.50; increase by $3
• C) increase by $6; decrease by $18
• D) decrease by $10.50; decrease by $6.67

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Definitions:

Rights Offering

A type of financial offering in which a company gives its existing shareholders the right to buy additional shares at a discounted price before the new shares are offered to the public.

Outstanding Shares

The total number of shares of stock that are currently owned by shareholders, including both public investors and restricted insiders.