In the figure given below, D₁ and S₁ are the initial demand and supply curves for a commodity in the market.Figure 3.3

-Refer to Figure 3.3. If the change in the demand in this market occurred before the change in supply, then starting from the initial equilibrium:
A) firms would experience a fall in profits and then a gradual increase in profits after the change in supply occurred.
B) there would be an immediate shortage, lasting until the price reaches P₂.
C) price would change from P₁ to P₂ after the change in demand and would change again from P₃ to P₄ after the change in supply.
D) there would be a surplus until the price reaches P₄.
E) there would be a surplus even after price reaches P₄.

Question

In the figure given below, D₁ and S₁ are the initial demand and supply curves for a commodity in the market.Figure 3.3
 
-Refer to Figure 3.3. If the change in the demand in this market occurred before the change in supply, then starting from the initial equilibrium:
A) firms would experience a fall in profits and then a gradual increase in profits after the change in supply occurred. 
B) there would be an immediate shortage, lasting until the price reaches P₂. 
C) price would change from P₁ to P₂ after the change in demand and would change again from P₃ to P₄ after the change in supply. 
D) there would be a surplus until the price reaches P₄. 
E) there would be a surplus even after price reaches P₄.

Quizplus · Accepted Answer

The Answer of In the figure given below, D₁ and S₁ are the initial demand and supply curves for a commodity in the market.Figure 3.3
 
-Refer to Figure 3.3. If the change in the demand in this market occurred before the change in supply, then starting from the initial equilibrium:
A) firms would experience a fall in profits and then a gradual increase in profits after the change in supply occurred. 
B) there would be an immediate shortage, lasting until the price reaches P₂. 
C) price would change from P₁ to P₂ after the change in demand and would change again from P₃ to P₄ after the change in supply. 
D) there would be a surplus until the price reaches P₄. 
E) there would be a surplus even after price reaches P₄.

In the Figure Given Below, D₁ and S₁ Are the Initial