Assume the Market Is in Equilibrium in the Graph Shown

question 49

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, and total surplus increases.
• B) Consumer surplus decreases, and total surplus increases.
• C) Consumer surplus increases, and total surplus decreases.
• D) Consumer surplus decreases, and total surplus decreases.

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Definitions:

Horizontal Analysis

A financial analysis technique that compares historical financial information over a series of reporting periods to identify trends and growth patterns.

Income Statement

A financial document that reports a company's financial performance over a specific accounting period, detailing revenues and expenses to show net income or loss.

Net Income

The total earnings of a company after deducting all expenses, taxes, and losses from total revenue.

Percentage Increase

A measure of how much a quantity has grown, typically expressed as a fraction of the starting value.