Exhibit 5-3 Use the Following Information About Demand and Supply

question 91

Multiple Choice

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question.
Refer to Exhibit 5-3.Suppose that D₂ and S₁ are the prevailing demand and supply curves for a product.If the supply schedule changes from S₁ to S₂,then:

• A) equilibrium price decreases from $10 to $8.
• B) equilibrium quantity decreases from 15 to 12.
• C) equilibrium quantity increases from 10 to 12.
• D) equilibrium price increases from $10 to $12.

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Definitions:

Antitrust Law

Legislation aimed at promoting fair competition for the benefit of consumers, mainly by regulating anti-competitive conduct by companies.

The Antitrust Division

A section of the government responsible for promoting and maintaining market competition by preventing anti-competitive practices.

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different buyers, not based on costs.

Basic Economy

A term often used in the airline industry referring to the most cost-effective and no-frills class of service available to passengers.