Economics · Oct / Nov 2025 · Paper 12 · Question 5
2281Price changes
The diagram shows the supply and demand curves for a good. The initial market equilibrium is given at point E1. There is a change in the market that leads to a new equilibrium at E2. What is the cause of the change in the market equilibrium?
- Aa decrease in the price of a substitute good
- Ba decrease in raw material prices
- Can increase in the price of a substitute good
- Dan increase in raw material prices
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Correct answer: C. an increase in the price of a substitute good
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