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JAMB Economics 2004 Question 44

Question 44

Price Determination

The diagram above shows the shifts in both demand and supply curves. What is the new equilibrium point after the shifts?

Diagram for this question
  1. A.E3
  2. B.E1
  3. C.E4
  4. D.E2
Show the answer and explanation

Answer: D (E2)

Explanation

Use the diagram. Demand shifts from D1 to D2 and supply from S1 to S2; the new equilibrium is where D2 crosses S2, at E2.