Graph 7-3
-Refer to Graph 7-3.When the price falls from P₂ to P₁, which of the following is NOT true?
A)the sellers who still sell the good are worse off because they now receive less
B)some sellers leave the market because they are not willing to sell the good at the lower price
C)the total cost of what is now sold by sellers is actually higher
D)all of the above are correct

Question

Graph 7-3 
-Refer to Graph 7-3.When the price falls from P₂ to P₁, which of the following is NOT true?
A)the sellers who still sell the good are worse off because they now receive less 
B)some sellers leave the market because they are not willing to sell the good at the lower price 
C)the total cost of what is now sold by sellers is actually higher 
D)all of the above are correct

Quizplus · Accepted Answer

When the price falls from P₂ to P₁, the quantity demanded will increase, leading to an increase in the quantity supplied by producers. However, since the price has fallen, some producers may not find it profitable to produce and sell the good. Therefore, some producers may exit the market, leading to a decrease in the total cost of production. This makes option C false, as the total cost of what is now sold by sellers is actually lower. Option A and B are both true as the remaining sellers receive less and some may leave the market.

Graph 7-3 -Refer to Graph 7-3.When the Price Falls from P₂ to from P₂