Figure 3.5 -In Figure 3.5, If the Change in Demand Occurred Before

Multiple Choice

Figure 3.5

-In Figure 3.5, if the change in demand occurred before the change in supply, then starting from the initial equilibrium,

A) firms would experience a fall in profits and then a gradual increase in profits after the change in supply occurred.
B) there would be an immediate shortage until the price reached P₂.
C) price would change from P₁ to P₂ after the change in demand and would change again from P₃ to P₄ after the change in supply.
D) there would be a surplus until the price reached P₄.
E) none of these would occur.