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Why Does an Increase in Demand Cause an Increase in a Good's

Question 40

Multiple Choice

Why does an increase in demand cause an increase in a good's equilibrium price?


A) There is a surplus at the old price, which leads firms to charge a higher price.
B) There is a shortage at the old price, which leads to firms to charge a higher price.
C) An increase in demand causes a price ceiling to be placed on a market.
D) At the old price, the quantity demanded is less than the quantity supplied, which leads firms charge a higher price.

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