Assume the Market Is in Equilibrium in the Graph Shown

question 48

Multiple Choice

Assume the market is in equilibrium in the graph shown at demand D and supply S₂ (at a quantity of 6) .If the supply curve shifts to S₁,and a new equilibrium is reached (at a quantity of 4) ,which of the following is true?

• A) Total surplus would increase by $7.50.
• B) Total surplus would decrease by $16.50.
• C) Total surplus would increase by $32.
• D) Total surplus would decrease by $14.00.

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Definitions:

Mixed Strategies

In game theory, a strategy that allows for the randomization of choices among different options to achieve a certain outcome.

Pure Strategies

In game theory, a pure strategy is an action chosen by a player where they select a specific move to follow in every possible situation within a game.

Dominant Strategy

A strategy in game theory that yields the best outcome for a player, regardless of what the other players do.

Payoff

The gain or loss that an investor or a player in a game receives as a result of a particular action or decision.