The market for Good $A$ is currently in equilibrium as shown in this graph.
The market for good $\mathrm{A}$

If the demand for Good $A$ increases, what would be the price and quantity that would exist in this market?

Choose 1 answer:
(A) $P_{5}, Q_{A}$
(B) $P_{3}, Q_{A}$
(c) $P_{5}, Q_{C}$
(D) $P_{3}, Q_{C}$

Question

The market for Good $A$ is currently in equilibrium as shown in this graph.
The market for good $\mathrm{A}$

If the demand for Good $A$ increases, what would be the price and quantity that would exist in this market?

Choose 1 answer:
(A) $P_{5}, Q_{A}$
(B) $P_{3}, Q_{A}$
(c) $P_{5}, Q_{C}$
(D) $P_{3}, Q_{C}$

Accepted Answer

∻Solution∻ ‖ a ⋮ Initial Equilibrium: The market for Good A is initially in equilibrium where the supply curve (S) intersects the demand curve (D). This occurs at point (QB, P4). ‖ ‖ b ⋮ Increase in Demand: When the demand for Good A increases, the demand curve shifts to the right. This means that at each price level, a higher quantity of Good A is demanded. ‖ ‖ c ⋮ New Equilibrium: The new equilibrium will be at the intersection of the new demand curve and the original supply curve. This intersection will occur at a higher price and higher quantity than the initial equilibrium. ‖ ‖ d ⋮ Graph Analysis: From the graph, the new equilibrium point after the increase in demand will be at (QC, P5), where the new demand curve intersects the original supply curve. ‖ ∻Answer∻ ⚹ (C) $P_{5}, Q_{C}$ ⚹ ∻Key Concept∻ ⚹ Equilibrium Shift Due to Demand Increase ⚹ ∻Explanation∻ ⚹ When demand increases, the demand curve shifts to the right, leading to a higher equilibrium price and quantity. In this case, the new equilibrium is at (QC, P5). ⚹◊What factors could cause an increase in the demand for Good A⍭ Generate me a similar question◊

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