Refer to the Graphs Above

question 79

Multiple Choice

Refer to the graphs above. Which of the following best represents a positive demand shock when prices are flexible?

• A) The shift from D₂ to D₃ in graph B
• B) The shift from D₂ to D₃ in graph A
• C) The shift from D₂ to D₁ in graph B
• D) The shift from D₂ to D₁ in graph A

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Definitions:

Price Effect

The impact on the market or consumers' purchasing behavior due to a change in the price of a good or service.

Megawatts

A unit of power equal to one million watts, often used to quantify the output of large power plants or the electricity consumption of large entities.

Natural Monopoly

A market situation where a single firm can supply the entire market more efficiently than multiple firms due to high fixed or start-up costs.

Producing Electricity

The process of generating electric power from sources of primary energy such as coal, natural gas, nuclear, solar, or wind energy.