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.
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.
ANSWER:
1) F
2) F
3) T
4) F
2) F
3) T
4) F