Figure 3-8 -Refer to Figure 3-8.The Graph in This Figure Illustrates an Figure

question 229

Multiple Choice

Figure 3-8
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for sugar at the intersection of D₁ and S₂ (pointB) If there is a decrease in the price of fertiliser used on sugar cane and there is a decrease in tastes for sugar-sweetened soft drinks, how will the equilibrium point change?

• A) The equilibrium point will move from B to A.
• B) The equilibrium point will move from B to C.
• C) There will be no change in the equilibrium point.
• D) The equilibrium point will move from B to E.

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Definitions:

Price

The amount of money required to purchase a good or service, reflecting its value in the marketplace.

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.

Perfectly Competitive

A market structure characterized by many buyers and sellers, homogeneous products, and free entry and exit from the market.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually pay.