The Figure Given Below Shows the Demand and Supply Curves

question 82

Multiple Choice

The figure given below shows the demand and supply curves in the market for coffee. S₁ and D₁ are the original demand and supply curves.Figure 3.5
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-When a freely functioning market is in disequilibrium:

• A)the government must set a price ceiling.
• B)the government must set a price floor.
• C)the price and quantities demanded and/or supplied change until equilibrium is established.
• D)it will continue to remain in disequilibrium.
• E)it will reach equilibrium at a very high/low price.

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Definitions:

Average Total Cost Curve

A graphical representation of the total cost (fixed plus variable) per unit of output produced, plotted against different levels of output.

Short-Run

A period in which at least one factor of production is fixed, and firms can only partially adjust their output levels.

Long-Run Minimum Cost

The lowest cost at which a firm can produce any given level of output in the long run, when all inputs can be varied.

Average Total Cost Curve

A graph that shows the cost per unit of output at different levels of production, illustrating how average total cost changes with changes in output.