With Respect to the Market Clearing Price and the Equilibrium

question 40

Multiple Choice

With respect to the market clearing price and the equilibrium quantity for good X, an increase in the demand for and a decrease in supply of the good definitely will

• A) increase the market clearing price and the equilibrium quantity of good X.
• B) decrease the market clearing price and the equilibrium quantity of good X.
• C) increase the market clearing price of good X but lower the equilibrium quantity of X.
• D) increase the market clearing price of good X but have an uncertain impact on the equilibrium quantity of X.

---

Definitions:

Special Order

A one-time or unique purchase order for goods or services, often tailored to specific requirements outside of regular offerings.

Broker Commission

A fee paid to a broker for executing a transaction. It is typically calculated as a percentage of the transaction value.

Differential Income

The increase or decrease in income resulting from a change in business decisions or operations.

Variable Manufacturing Costs

Expenses that change in proportion to the production volume, such as raw materials and direct labor costs.