Questions are based on the demand and supply diagrams in Figure D1 and S1 are the original demand and supply curves D2- D3- S2 and S3 are possible new demand and supply curves- Starting from initial co librium point 1 what point on the graph most likely to result from each change- -A government research agency has published outcome of studies which say that consumption of good X could cause cancer- In addition- assume that a powerful lot has persuaded the government to give subsidy to the manufacturers of good X- what point in Figure is most likely to be the new equilibrium price and quantity-

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Questions are based on the demand and supply diagrams in Figure $D_{1}$ and $S_{1}$ are the original demand and supply curves $D_{2}, D_{3}, S_{2}$ and $S_{3}$ are possible new demand and supply curves. Starting from initial co librium point (1) what point on the graph most likely to result from each change?

$\to$ A government research agency has published outcome of studies which say that consumption of good X could cause cancer. In addition, assume that a powerful lot has persuaded the government to give subsidy to the manufacturers of good X. what point in Figure is most likely to be the new equilibrium price and quantity?

Point 6.

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Point 5.

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Point 3.

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Point 9.

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Solution

The correct option is D Point 9.
Demand decreases as it is harmful for consumption. Supply increases as the subsidy has been provided to the manufacturers. Thus, Point 9 marks the new equilibrium point.

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The correct option is D Point 9.Demand decreases as it is harmful for consumption. Supply increases as the subsidy has been provided to the manufacturers. Thus, Point 9 marks the new equilibrium point.

The correct option is D Point 9.
Demand decreases as it is harmful for consumption. Supply increases as the subsidy has been provided to the manufacturers. Thus, Point 9 marks the new equilibrium point.