Assume the Market Is in Equilibrium in the Graph Shown

question 71

Multiple Choice

Assume the market is in equilibrium in the graph shown at demand D and supply S1. If the supply curve shifts to S2, and a new equilibrium is reached, equilibrium quantity will increase from 4 to 4.5 units. Which of the following is true?

• A) Producer surplus increases by $3.00.
• B) Producer surplus decreases by $8.50.
• C) Producer surplus increases by $7.50.
• D) Producer surplus decreases by $16.

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Definitions:

Counterevidence

Information or data that contradicts or disproves a claim, theory, or hypothesis.

Theories

Systematic sets of ideas or principles that explain phenomena and are supported by evidence.

Ideal Scientist

A hypothetical or theoretical representation of a scientist who perfectly embodies the qualities and practices of excellent scientific inquiry.

Skepticism

Skepticism is an attitude of doubt or a disposition to incredulity either in general or toward a particular object.