If a Market Is Allowed to Move Freely to Its

question 65

Multiple Choice

If a market is allowed to move freely to its equilibrium price and quantity,then an increase in supply will

• A)increase consumer surplus.
• B)reduce consumer surplus.
• C)not affect consumer surplus.
• D)Any of the above are possible.

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Definitions:

Budget Line

A graphical representation showing the combination of two goods that can be purchased with a fixed amount of income, given their prices.

Budget Line

An illustration showing all the different ways two products can be acquired using a certain amount of money, assuming the prices do not change.

Utility

A measure of the satisfaction or pleasure that individuals get from the consumption of goods and services.

Budget Line

A diagram illustrating every potential mix of two commodities that are affordable within a specific budget, considering their set prices.