Economics · May / June 2018 · Paper 11 · Question 5
In the diagram, suppliers have set the price of a product at P_S. Economic theory predicts that the equilibrium price of the product will rise to P_E. What is the reason for this movement in price?
- ADemand for the product will increase.
- BNo more of the product can be supplied.
- CSome consumers are willing to pay higher prices.
- DSuppliers are facing rising costs.
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Correct answer: C. Some consumers are willing to pay higher prices.
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