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Answer:
C). The stock price will increase and settle at a new equilibrium level.
Explanation:
As per the details provided, 'the next earnings report of the company would display an increase in the stock price and settled onto a new level of equilibrium.' The recommendation and approval from the Federal Drug Administration would assist in establishing the credibility of the company and gain people's trust. Therefore, people will now invest more leading to a steep rise in its share price and eventually, leading the company to end up with a good profit. This is why the equilibrium would shift and settle to a greater level. Thus, option C is the correct answer.