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:

Contract

A legally enforceable pact made between two or more entities, binding them in agreement.

Punitive Damages

Compensation awarded in a lawsuit that exceeds simple restitution and is intended to punish the defendant for wrongdoing and deter future similar acts.

Arbitrator's Award

The decision or outcome given by an arbitrator, who is a neutral third party, at the conclusion of an arbitration proceeding.

Authority

The power or right given to an individual or body to make decisions, enforce rules, or govern.