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:

Wages And Salaries

Compensation paid to employees for their services, where wages are often hourly rates and salaries are fixed annual amounts.

Planning Budget

A financial plan for the future which outlines projected income and expenditures during a specific period.

Net Operating Income

The profit generated from a company's regular business operations, excluding deductions for interest and taxes.

Flexible Budget

A flexible budget that varies according to activity or volume changes.