The Figure Below Shows the Supply and the Demand for a Good

question 209

Multiple Choice

The figure below shows the supply and the demand for a good (left) and the cost curves of an individual firm in this market (right) . Assume that all firms in this market, including the potential entrants, have identical cost curves. Initially, the market is in equilibrium at point A.

-Refer to the figure above.Suppose that the market has reached the long-run equilibrium.Then,due to news of the product's defects and recall,the demand falls by 2 units at each price.The market will tend toward the new long run equilibrium where ________.

• A) the price is $1.00 and the quantity sold is 6 units
• B) the price is $2.00 and the quantity sold is 2 units
• C) the price is $2.00 and the quantity sold is 4 units
• D) the price is $3.00 and the quantity sold is 2 units

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Definitions:

Dividends Declared

Dividends declared are profits a company announces it will distribute to its shareholders, indicating when and how much will be paid out.

Liabilities

Financial obligations or debts that a company owes to others, which must be settled over time through the transfer of economic benefits.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing ownership interest.

Expenses

Costs incurred in the process of generating revenue, typically including items like rent, salaries, and utilities.