Figure 3.5 -In Figure 3.5, If the Change in Demand Occurred Before

question 54

Multiple Choice

Figure 3.5

-In Figure 3.5, if the change in demand 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 until the price reached 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 reached P₄.
• E) none of these would occur.

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