Assuming the demand changed from D1 to D2, and we examine the adjustment process from an horizontal perspective, which of the following statements about the sequence of changes in the this adjustment process is TRUE? (A step in the sequence could have more than one event.) The initial equilibrium is at P=$15, and Q=116 First, the price of the good increases. Third, as the price is increasing, quantity supplied increases. Second the quantity demanded increases to 16, creating a market shortage. The initial equilibrium is at P=$15 and Q=12 Fourth, a new equilibrium is established at P=18 and Q=16. First, the quantity demanded increases from 12 to 20, creating a market surplus. First, the quantity demanded increases from 12 to 20, creating a market shortage. Second, as they face a shortage of the good buyers will bid up its price. Third, as the price is increasing, quantity demanded will decrease.
Assuming the
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The initial equilibrium is at P=$15, and Q=116 |
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First, the |
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Third, as the price is increasing, quantity supplied increases. |
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Second the quantity demanded increases to 16, creating a market shortage. |
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The initial equilibrium is at P=$15 and Q=12 |
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Fourth, a new equilibrium is established at P=18 and Q=16. |
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First, the quantity demanded increases from 12 to 20, creating a market surplus. |
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First, the quantity demanded increases from 12 to 20, creating a market shortage. |
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Second, as they face a shortage of the good buyers will bid up its price. |
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Third, as the price is increasing, quantity demanded will decrease. |
The demand curve in the above graph is downward sloping indicating the negative relationship between the quantity demanded and price of the good.
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