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Identify the scenario which corresponds to the graph of a given market below: $10 $9 $8 $7 $6 $5 $4 $3 $2 $1 $- 20 40 60 80 100 120 140 160 Quantity The graph represents a decrease in supply and a decrease in equilibrium price and quantity. The graph represents a decrease in demand and a decrease in equilibrium price and quantity. The graph represents a decrease in equilibrium quantity demanded because of a price increase. The graph represents an increase in demand and a decrease in equilibrium price and quantity.

Identify the scenario which corresponds to the graph of a given market below: $10 $9 $8 $7 $6 $5 $4 $3 $2 $1 $- 20 40 60 80 100 120 140 160 Quantity The graph represents a decrease in supply and a decrease in equilibrium price and quantity. The graph represents a decrease in demand and a decrease in equilibrium price and quantity. The graph represents a decrease in equilibrium quantity demanded because of a price increase. The graph represents an increase in demand and a decrease in equilibrium price and quantity.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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### Identify the Scenario Which Corresponds to the Graph of a Given Market #### Graph Explanation: The graph displayed is a typical supply and demand graph. It shows three main curves: - **Original Supply Curve** (Blue): This downward-sloping line shifts to a new position. - **Original Demand Curve** (Red): This upward-sloping line remains constant. - **Shifted Supply Curve** (Blue): This shifted curve represents a decrease in supply. **Axes:** - The x-axis represents Quantity, going from 0 to 160. - The y-axis represents Price, ranging from $0 to $10. **Details:** 1. **Original Supply Curve** shifts to the left, indicating a decrease in supply. 2. **Arrows** on the graph show the direction of the shift. This shift results in a new equilibrium, where both equilibrium price and quantity might be affected. #### Answer Options: - ○ The graph represents a decrease in supply and a decrease in equilibrium price and quantity. - ○ The graph represents a decrease in demand and a decrease in equilibrium price and quantity. - ○ The graph represents a decrease in equilibrium quantity demanded because of a price increase. - ○ The graph represents an increase in demand and a decrease in equilibrium price and quantity. **Correct Scenario:** The scenario that most accurately describes the graph is the one that corresponds to the leftward shift of the supply curve, indicating a decrease in supply. This typically leads to a price increase and a quantity decrease in the market equilibrium.
Transcribed Image Text:### Identify the Scenario Which Corresponds to the Graph of a Given Market #### Graph Explanation: The graph displayed is a typical supply and demand graph. It shows three main curves: - **Original Supply Curve** (Blue): This downward-sloping line shifts to a new position. - **Original Demand Curve** (Red): This upward-sloping line remains constant. - **Shifted Supply Curve** (Blue): This shifted curve represents a decrease in supply. **Axes:** - The x-axis represents Quantity, going from 0 to 160. - The y-axis represents Price, ranging from $0 to $10. **Details:** 1. **Original Supply Curve** shifts to the left, indicating a decrease in supply. 2. **Arrows** on the graph show the direction of the shift. This shift results in a new equilibrium, where both equilibrium price and quantity might be affected. #### Answer Options: - ○ The graph represents a decrease in supply and a decrease in equilibrium price and quantity. - ○ The graph represents a decrease in demand and a decrease in equilibrium price and quantity. - ○ The graph represents a decrease in equilibrium quantity demanded because of a price increase. - ○ The graph represents an increase in demand and a decrease in equilibrium price and quantity. **Correct Scenario:** The scenario that most accurately describes the graph is the one that corresponds to the leftward shift of the supply curve, indicating a decrease in supply. This typically leads to a price increase and a quantity decrease in the market equilibrium.
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