Figure 11.1:
-In Figure 11.1,ceteris paribus,if consumers lose confidence in the economy and reduce their spending,the new equilibrium is likely to occur at:

Question

Figure 11.1: 
-In Figure 11.1,ceteris paribus,if consumers lose confidence in the economy and reduce their spending,the new equilibrium is likely to occur at:

Quizplus · Accepted Answer

If consumers reduce their spending, it leads to a decrease in demand. As a result, the demand curve shifts leftward from D1 to D2. The new equilibrium point occurs at the intersection of the new demand curve (D2) and the original supply curve (S), which is at the point P₁ and Q₂. Therefore, the correct choice is B.

Figure 11.1: -In Figure 11.1,ceteris Paribus,if Consumers Lose Confidence in the Economy