-Refer to the Above Diagram,in Which S₁ and D₁ Represent

question 159

Multiple Choice

-Refer to the above diagram,in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market the indicated shift in demand may have been caused by:

• A) a decline in the number of buyers in the market.
• B) a decline in the price of a substitute good.
• C) an increase in incomes if the product is a normal good.
• D) an increase in incomes if the product is an inferior good.

---

Definitions:

Equilibrium Price

The price at which the supply of an item matches its demand, ensuring that the market is in balance.

Excess Supply

A situation where the quantity of a good or service supplied surpasses the quantity demanded at a specific price.

Excess Demand

Excess demand occurs when the quantity demanded of a product or service at a given price exceeds the quantity supplied, often leading to a shortage.

Income

The money received, especially on a regular basis, for work or through investments.