Question

T or F with concise Explaination

Constrained price-bottom government policies lead to excessive demand, which is more inefficient than market discipline ( )
Those who have the will and ability to pay the price get scarce resources in the market economy.()
A decrease in supply will cause the biggest price increase when demand is very inelastic. ( )
If the government removes taxes on goods, both the price paid by the buyer and the price received by the seller will be lowered." ()
For an inelastic demand curve, the total return moves in the same direction as the price ().

Answer 1

1) Statement 1 is TRUE ,because when price of a good is low then its deman is high.And if the supply of the good is not adequate then it cause a big problem in market condition, such as black marketing,stock pilling ,etc.. so It is imore inefficient than market discipline.

2) Statement 2 is FALSE , because it is contravene Adam smith's theory of "INVISIBLE HAND" ,which tells who has the ability to buy in market can have the resources.

3) Statement 3 is TRUE ,when supply is lower and the demand is very inelastic then price will be increased

4) statement 4 is TRUE, if the tax is remove by government then it benifits the buyers and sellers.it give more money in the hand of people .

5) Statement 5 is TRUE ,when the price of product increase in inealstic demand curvethe percentage increase in price greater than the percentage in demand.THus has a net positive effect on the total revenue and it rises.