FIGURE 8-1 -Refer to Figure 8-1. in Graph B, What Is the B

question 124

Multiple Choice

FIGURE 8-1

-Refer to Figure 8-1. In Graph B, what is the result of the market demand decreasing from D₀ to D₁?

• A) Both the market price and the price of the price-taking firm have increased to $5.
• B) At the new equilibrium price, the firm will be unable to sell any of its output.
• C) Both the market price and the price of the price-taking firm have fallen to $4.
• D) The quantity of goods transacted in the market has fallen from Q1 to Q0.

Understand the concepts of price ceilings and price floors in market economics.

Describe the impact of government interventions, such as price controls, on market equilibrium.

Identify the conditions under which surpluses and shortages occur in the market.

Recognize the effects of supply and demand shifts on market equilibrium.

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