Figure 7-A
-Refer to Figure 7-A.In Graph B, the market demand has decreased from d₀ to d₁, and as a result:

Question

Figure 7-A -Refer to Figure 7-A.In Graph B, the market demand has decreased from d₀ to d₁, and as a result:

Quizplus · Accepted Answer

When market demand decreases, the equilibrium quantity of goods transacted in the market falls. This results in a decrease in both the market price and the price of the price-taking firm. In this case, the new equilibrium price is $4, as shown by the intersection of d₁ and MC for the firm. Therefore, choice B is correct. Choices A and D are incorrect because they suggest an increase in price, whereas the correct answer is a decrease. Choice C is incorrect because it correctly identifies a decrease in quantity, but only partially explains the outcome.

Figure 7-A -Refer to Figure 7-A.In Graph B, the Market Demand Has