Question

In: Economics

When a shortage exists in the market, the price is below equilibrium. Consequently, buyers are willing...

When a shortage exists in the market, the price is below equilibrium. Consequently, buyers are willing to buy more than sellers are willing to sell at that price. If demand and supply curves do not move, more will be sold only if the price increases.

Select one:

True

False

Question text

If Betty experiences a decrease in pay, we would expect Betty’s demand for inferior goods to increase.

Select one:

True

False

A decrease in supply causes price to rise, demand to fall and quantity supplied to decrease.

Select one:

True

False

If an increase in income increases the demand for a good, then the good is described as a substitute good.

Select one:

True

False

Question text

A rightward shift of the supply curve will decrease price, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity than the initial price and quantity.

Select one:

True

False

Solutions

Expert Solution

A) true ,

B)if betty experience fall in pay,which leads to decrease in her income . decrease in income leads to increase in demand of inferior goods as there is a negitive relationship between income and demand of inferior goods.so statement is trye.

C) decrease in supply shifts supply curve to left , showing seller wants to sell each QUANTITY at higher price,which leads to decrease in quantity demanded and Quantity supplied Decreases and price increases.so statement is true.

D)if an increase in income, Increase the demand of good then good is normal .so statement is false.

E)the rightward shift of supply curve shows ,seller is wants to sell each QUANTITY at lowerer price ,which expand demand and increase the supply.new market EQUILIBRIUM will at lower price and higher QUANTITY than initial price and quantity.

As QUANTITY supplied would increase but statement says ,it would decrease

So statement is false


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