Assume the Market Is in Equilibrium in the Graph Shown

question 100

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, which of the following is true?

• A) Consumer surplus increases, but producer surplus decreases.
• B) Consumer surplus decreases, but producer surplus increases.
• C) Both consumer and producer surplus increase.
• D) Both consumer and producer surplus decrease.

---

Definitions:

Douglas McGregor

An American social psychologist who proposed Theory X and Theory Y, contrasting models of workforce motivation and management.

Theory Y

A management concept that assumes employees are inherently motivated and enjoy their work, requiring less supervision and more collaboration and trust.

Frank Gilbreth

An American engineer, consultant, and author, best known for his work in time and motion study alongside his wife Lillian Gilbreth.

Lillian Gilbreth

Lillian Gilbreth was a pioneering engineer and psychologist known for her contributions to industrial management and ergonomics, often working alongside her husband, Frank Gilbreth.