-Refer to the production possibility graph above. Assume that the economy is in equilibrium at point e. If the price of good B increases, the new equilibrium is most likely to be
A) point b.
B) point h.
C) point f.
D) point d.
E) point e.

Question

-Refer to the production possibility graph above. Assume that the economy is in equilibrium at point e. If the price of good B increases, the new equilibrium is most likely to be
A) point b. 
B) point h. 
C) point f. 
D) point d. 
E) point e.

Quizplus · Accepted Answer

If the price of good B increases, the economy will likely produce more of good B and less of other goods, moving the equilibrium towards point f, which represents a higher production of good B.

-Refer to the Production Possibility Graph Above