Economics 2281 · O Level · Price determination

Price determination — practice question

The diagram illustrates the supply and demand curves for a good. The starting market equilibrium is shown at point E₁. A shift in the market then results in a new equilibrium at E₂. What is the cause of the shift in the market equilibrium?

  • Aa decrease in the price of a substitute good
  • Ba decrease in raw material prices
  • Can increase in the price of a substitute good
  • Dan increase in raw material prices

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