Graph 14-9

-Refer to Graph 14-9. When a firm in a competitive market, like the one depicted in panel (a) , observes market price rising from P₁ to P₂, it is most likely the result of:

Question

Graph 14-9 -Refer to Graph 14-9. When a firm in a competitive market, like the one depicted in panel (a), observes market price rising from P₁ to P₂, it is most likely the result of:

Quizplus · Accepted Answer

When market price rises, it indicates an increase in equilibrium quantity and a shift in either market demand or market supply curve. Since the graph shows an upward shift in the demand curve from Demand₀ to Demand₁, the most likely reason for the price increase is an increase in market demand. Option A is incorrect because an increase in market supply would result in a decrease in price, not an increase. Options C and D are also not relevant to the given scenario.

Graph 14-9 -Refer to Graph 14-9. When a Firm in a Competitive