Figure 3-8

question 83

Multiple Choice

Figure 3-8
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₁ (point A) .If there is a shortage of apples how will the equilibrium point change?

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

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Definitions:

Price Floor

A government or regulatory imposed minimum price for goods or services, intended to prevent prices from falling too low.

Surplus

An excess of income or assets over expenditure or liabilities in a given period, typically referring to profit or a budgetary surplus.

Shortage

A market condition in which the demand for a product exceeds its supply at a particular price.

Market Price

The actual selling price of a good or service in the marketplace, determined by the forces of supply and demand.