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JAMB Economics 1998 Question 15

Question 15

Price Determination

In the diagram above, D0D0 is the original demand curve, S0S0 is the original supply curve, D1D1 is the new demand curve and S1S1 is the new supply curve. What is the new equilibrium quantity?

Diagram for this question
  1. A.Q1
  2. B.Q2
  3. C.Q3
  4. D.Q4.
Show the answer and explanation

Answer: B (Q2)

Explanation

The new equilibrium is where the new demand curve D1D1 crosses the new supply curve S1S1, which is above Q2.