The Following Questions Refer to the graph below.
-Which of the following shifts best represents the likely effect of prohibition on the market for beer?

Question

The Following Questions Refer to the graph below. 
-Which of the following shifts best represents the likely effect of prohibition on the market for beer?

Quizplus · Accepted Answer

Prohibition would result in a decrease in supply, shifting the supply curve to the left (from S₂ to S₁). This would result in higher equilibrium price (P1 to P2) and lower equilibrium quantity (Q1 to Q2) of beer. Additionally, prohibition would reduce demand for beer as well, leading to a further decrease in equilibrium quantity of beer (from Q2 to Q3). Therefore, the best choice is E, which shows a leftward shift in both supply and demand curves. Choice D shows only supply shift and is not complete. Choice A and B show only supply shift but in opposite directions. Choice C shows only demand shift, which is incorrect as supply will also be affected by prohibition.

The Following Questions Refer to the Graph Below