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JAMB Economics 1981 Question 25

Question 25

Price Determination

With reference to the figure above, what is the new equilibrium quantity and price if the Demand Curve shifts forward from D1 to D2 and the Supply Curve shifts downward from S1 to S2?

Diagram for this question
  1. A.(P2, q3)
  2. B.(P3, q2)
  3. C.(P2, qo)
  4. D.(Po, q1)
  5. E.(P2, q2)
Show the answer and explanation

Answer: A ((P2, q3))

Explanation

The new equilibrium is where D2 crosses S2; reading down and across from that point gives quantity q3 and price P2.