Figure 2.1.1
-Refer to Figure 2.1.1 above. Starting from point A, how do the firms in the market react when the price of coffee increases from $6.00 to $7.50 per pound?
A) The supply curve shifts to the right and the quantity supplied increases to 10 million pounds per year.
B) The supply curve shifts from S1 to S2, but the market moves from A to B, so the quantity supplied increases to 9 million pounds per year.
C) The market moves from A to B temporarily, but eventually will settle at point C, where the quantity supplied will be 10 million pounds.
D) The supply curve does not shift, but the quantity supplied increases from 7 to 9 million pounds per year.

Question

Figure 2.1.1
-Refer to Figure 2.1.1 above. Starting from point A, how do the firms in the market react when the price of coffee increases from $6.00 to $7.50 per pound?
A) The supply curve shifts to the right and the quantity supplied increases to 10 million pounds per year. 
B) The supply curve shifts from S1 to S2, but the market moves from A to B, so the quantity supplied increases to 9 million pounds per year. 
C) The market moves from A to B temporarily, but eventually will settle at point C, where the quantity supplied will be 10 million pounds. 
D) The supply curve does not shift, but the quantity supplied increases from 7 to 9 million pounds per year.

Quizplus · Accepted Answer

The Answer is D

Figure 2.1.1 -Refer to Figure 2.1.1 Above. Starting from Point A, How