Figure 11.2

-In Figure 11.2, the increase in equilibrium prices could represent

Question

Figure 11.2
 
-In Figure 11.2, the increase in equilibrium prices could represent

Quizplus · Accepted Answer

The increase in equilibrium prices is due to an increase in demand, which is known as demand-pull inflation. Cost-push inflation occurs when supply-side factors, such as increases in production costs, lead to higher prices. Wage-push inflation occurs when labor unions negotiate higher wages, leading to increased production costs and higher prices. Decreased supply or demand would cause a shift in the supply or demand curve, resulting in a new equilibrium price and quantity, but not necessarily inflation.

Figure 11.2 -In Figure 11.2, the Increase in Equilibrium Prices Could Represent