Refer to the Graph Above

question 85

Multiple Choice

Refer to the graph above. Suppose consumers do not fully appreciate the benefits of the product whose market shown in the graph. If an external agency is able to provide full information about the benefits of the product, then:

• A) The supply curve will shift to the left
• B) The demand curve will shift to the right
• C) Both the new equilibrium price and quantity will be lower
• D) The new equilibrium price will be higher but the equilibrium quantity will be either higher or lower

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Definitions:

Masked

Concealed or hidden, often referring to emotions, intentions, or symptoms that are not visibly apparent or are deliberately obscured.

Placebo

A substance or treatment which is designed to have no therapeutic value, commonly used as a control in testing new drugs.

Correlation Coefficient

A statistical measure that describes the degree to which two variables move in relation to each other, ranging from -1 to 1.

Perfect Correlation

A statistical relationship indicating a flawless direct or inverse linkage between two variables.