Answer the following statement true (T) or false (F)

1) If market demand increases and market supply decreases, the change in equilibrium price is
unpredictable without first knowing the exact magnitudes of the demand and supply changes.
2) A decrease in supply of X increases the equilibrium price of X, which reduces the demand for X
and automatically returns the price of X to its initial level.
3) In a competitive market, every consumer willing to pay the market price can buy a product and
every producer willing to sell the product at that price can sell it.
4) A price floor in a competitive market will result in persistent shortages of a product.


1) F
2) F
3) T
4) F