Assume the Market Is in Equilibrium in the Graph Shown

question 52

Multiple Choice

Assume the market is in equilibrium in the graph shown at demand D and supply S1 (and a quantity of 5) .If the supply curve shifts to S2,and a new equilibrium is reached (at a quantity of 7) ,which of the following is true?

• A) Consumer surplus increases by $5.
• B) Consumer surplus decreases by $5.
• C) Consumer surplus increases by $9.
• D) Consumer surplus decreases by $9.

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Definitions:

Corporate Governance

The framework of rules, practices, and processes by which a company is directed and controlled, often focusing on the interests of shareholders, management, customers, suppliers, financiers, government, and the community.

Financialization

A trend in which financial services, such as investment, become a more dominant sector in the national economy, influencing societal and economic structure.

Value Maximization

Refers to strategies aimed at increasing the overall value and performance of a company, maximizing shareholder wealth.

Capital Investment

Funds spent by a business to acquire or upgrade physical assets such as property, industrial buildings or equipment.