**Understanding Shifts in Equilibrium: An Analysis of Supply and Demand**In the graph provided, the x-axis represents Quantity and the y-axis represents Price. There are two supply curves (S1 and S2) and two demand curves (D1 and D2).- **Initial Equilibrium:** At the intersection of supply curve S1 and demand curve D1, the equilibrium is at point D.- **New Equilibrium:** To shift equilibrium to point B, the intersection must now occur between supply curve S2 and demand curve D2.### Graph Breakdown:1. **Supply Curves:** - **S1:** The initial supply curve. - **S2:** The new supply curve which indicates a shift in the supply conditions.2. **Demand Curves:** - **D1:** The initial demand curve. - **D2:** The new demand curve which reflects a shift in demand conditions.### Points of Interest:- **Point A:** Intersection of D1 and S1.- **Point B:** Intersection of D2 and S2 (desired new equilibrium).- **Point C:** Intersection of D2 and S1.- **Point D:** Original equilibrium point (intersection of D1 and S1).### Question:To shift equilibrium from point D to point B, what needs to happen?A variety of changes in market conditions could influence this shift:**Options:**A. **A decrease in the number of buyers and an increase in resource prices.** - This would typically shift the demand curve leftward (less demand) and the supply curve leftward (more expensive to supply), not fitting our desired change.B. **A decrease in the price of a substitute and an increase in the number of firms.** - This would generally increase supply and could decrease demand for the product, depending on the substitutes' effect on demand courses.C. **An increase in the number of buyers and a decrease in resource prices.** (Correct Answer) - An increase in buyers shifts the demand curve rightward to D2 (more demand). - A decrease in resource prices shifts the supply curve rightward to S2 (cheaper to produce).D. **An increase in the price of a substitute and a decrease in the number of firms.** - This might decrease supply (leftward shift) and increase demand, but not fit the target shift precisely.E. **A decrease in the

The markets are operated through the workings of the forces of demand for goods, and services, and…

Price S1 S2 D2 D1 Quantity In the above graph, suppose equilibrium is at point D. What would cause equilibrium to shift to point B? A decrease in the number of buyers and an increase in resource prices. A decrease in the price of a substitute and an increase in the number of firms. CAn increase in the number of buyers and a decrease in resource prices. An increase in the price of a substitute and a decrease in the number of firms. A decrease in the price of a complement and a decrease in firms's taxes.

Price S1 S2 D2 D1 Quantity In the above graph, suppose equilibrium is at point D. What would cause equilibrium to shift to point B? A decrease in the number of buyers and an increase in resource prices. A decrease in the price of a substitute and an increase in the number of firms. CAn increase in the number of buyers and a decrease in resource prices. An increase in the price of a substitute and a decrease in the number of firms. A decrease in the price of a complement and a decrease in firms's taxes.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter8: Understanding Markets And Industry Changes

Section: Chapter Questions

Problem 8.4IP

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