Figure 4-7 -Refer to Figure 4-7. the Figure Above Represents the Market

question 332

Multiple Choice

Figure 4-7
-Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. If the price of iced tea is $1, what changes in the market would result in an economically efficient output?

• A) The price would increase, the quantity supplied would increase, and the quantity demanded would decrease.
• B) The quantity supplied would increase, the quantity demanded would decrease, and the equilibrium price would increase.
• C) The price would increase, the demand would increase, and the supply would decrease.
• D) The price would increase, quantity demanded would increase, and quantity supplied would decrease.

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Definitions:

Maximization Problem

A type of optimization problem that seeks to find the maximum value of a function subject to certain constraints.

Constraints

Limitations or restrictions on the variables in a problem, which define the feasible region for solutions.

Feasible Region

In operations research and optimization, the set of all possible points that satisfy a set of constraints, representing viable solutions to a problem.

Nonnegativity Constraints

Restrictions in mathematical modeling that require certain variables to be greater than or equal to zero.