Refer to the Above Graph, Which Shows the Market for Bicycles

question 317

Multiple Choice

Refer to the above graph, which shows the market for bicycles. S1 and D1 are the original supply and demand curves. D2 and D3 and S2 and S3 are possible new demand and supply curves. Starting
From the initial equilibrium (point 1) , which point on the graph is most likely to be the new equilibrium
After the introduction of technological improvements in bicycle production and successful publicity
Campaigns by the government on the virtues of bicycling to work?

• A) 3
• B) 4
• C) 5
• D) 6

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Definitions:

Long-run Equilibrium Price

The price at which the quantity of a good demanded equals the quantity supplied, with all adjustments made for factors affecting supply or demand over time.

Product Demand

The desire and willingness of consumers to purchase a particular product at various prices during a certain period.

Purely Competitive Firm

A business functioning in an environment with numerous purchasers and vendors, where no single entity has the power to notably affect the prices in the market.

Technological Improvement

Advances and innovations in technology that enhance efficiency, productivity, or capabilities in various sectors.