In the Figure Given Below D₁ and S₁ Are the Initial

question 73

Multiple Choice

In the figure given below D₁ and S₁ are the initial demand and supply curves for a commodity in the market.
Figure 3.3

-Refer to Figure 3.3. If the change in the demand in this market occurred before the change in supply, then starting from the initial equilibrium:

• A) firms would experience a fall in profits and then a gradual increase in profits after the change in supply occurred.
• B) there would be an immediate shortage, lasting until the price reaches P₂.
• C) price would change from P₁ to P₂ after the change in demand and would change again from P₃ to P₄ after the change in supply.
• D) there would be a surplus until the price reaches P₄.
• E) there would be a surplus even after price reaches P₄.

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Definitions:

Cognitive Interpretations

The mental processes involved in perceiving, recognizing, and understanding thoughts, behaviors, and events, often influencing how individuals react to their environment.

Motivation

The psychological process that stimulates and directs goal-oriented behaviors, stemming from desires, needs, or rewards.

Orbitofrontal Cortex

The orbitofrontal cortex is a region of the brain involved in the cognitive process of decision-making, processing of rewards and punishments, and emotion regulation.

Amygdala

A structure within the brain's temporal lobe associated with experiencing emotions, such as fear and pleasure, and forming emotional memories.