Assume the Market Is in Equilibrium in the Graph Shown

question 33

Multiple Choice

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

• A) Consumer surplus increases, but producer surplus decreases.
• B) Consumer surplus decreases, but producer surplus increases.
• C) Both consumer and producer surplus increase.
• D) Both consumer and producer surplus decrease.

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Definitions:

Warranty Of Merchantability

assures that a product sold by a merchant is fit for the general purpose for which it is sold, meeting a buyer's reasonable expectations.

Conspicuous

Something easily seen or noticed; clearly visible or attracting attention due to its distinctiveness.

Strict Liability

A legal doctrine that holds a party responsible for their actions or products, without the plaintiff having to prove negligence or fault.

Unreasonably Dangerous

A legal term describing a product or condition that poses a significant risk of harm to people or property.