Refer to the Information Provided in Figure 4

question 13

Multiple Choice

Refer to the information provided in Figure 4.2 below to answer the question(s) 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:

Low-Cost Leadership

A business strategy where a company becomes the lowest cost producer in its industry without sacrificing quality.

Raw Material Waste

Unwanted or unusable materials generated during the production process or from the consumption of raw materials, which can impact efficiency and environmental sustainability.

Competitive Advantage

The unique attributes or capabilities that allow an organization to outperform its competitors, resulting in greater sales or margins and/or retaining more customers.