Refer to the Information Provided in Figure 4

question 31

Multiple Choice

Refer to the information provided in Figure 4.2 below to answer the questions that follow.
Figure 4.2
-Refer to Figure 4.2.The market is initially in equilibrium at Point A and supply shifts from S₁ to S₂.Which of the following statements is TRUE?

• A)Price will still serve as a rationing device causing quantity supplied to rise from 8 to 11 soft pretzels.
• B)There is no need for price to serve as a rationing device in this case because the new equilibrium quantity is higher than the original equilibrium quantity.
• C)Price will still serve as a rationing device causing quantity demanded to fall from 11 to 8 soft pretzels.
• D)The market cannot move to a new equilibrium until there is also a change in supply.

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Definitions:

Comparative Advantage

A theory in economics that suggests a country should specialize in producing and exporting goods in which it has a lower opportunity cost than its trading partners.

Absolute Advantage

The ability of an entity to produce a good or service more efficiently than its competitors when using the same amount of resources.

Skilled Human Resources

Individuals within the workforce who possess specialized training, knowledge, and experience in particular fields or disciplines.

Per Capita Incomes

The average income earned per person in a certain area in a specified year.