Question

Study the following diagram and answer the questions:

Questions:

1. The diagram shows the `square` relationship between price and supply.
2. The supply curve 'S' has a `square` slope.
3. In a decrease in supply, the equilibrium point shifts from 'e' to `square`.
4. In an increase in supply, the equilibrium point shifts from 'e ' to `square`.

Answer 1

1. The diagram shows the direct relationship between price and supply.
2. The supply curve 'S' has a positive slope.
3. In a decrease in supply, the equilibrium point shifts from 'e' to 'e₁'.
4. In an increase in supply, the equilibrium point shifts from 'e ' to 'e₂'.