Question

1. In general, supply curve slope upward to the right because

1. Technology progresses over time, increasing the ability of firms to produce more at existing price.
2. Increases in the price of a commodity lead to rightward shifts of the supply curve.
3. Rising prices motivate producers to offer more units for sale.
4. Of increases in input prices as production is increase
5. Empirical studies almost always show that this is the case

2. In a free market, actual price will

1. Always exceed equilibrium price.
2. Be very difficult to calculate.
3. Remain unchanged as equilibrium price changes.
4. Cause the demand and supply curves to shift direction.
5. Move toward equilibrium price

3. For a market to exhibit excess supply,

1. Demand must exceed supply.
2. The actual price must above the equilibrium price.
3. The demand curve must slope upward.
4. The supply curve must slope downward
5. None of these above

Answer 1

Answer : 1) The answer is option c.

The upward sloping supply curve shows the positive relationship between price and quantity supplied. This means that if price rise then producers offer more quantities for sale. For this reason except option c other options are not correct. Therefore, option c is the correct answer.

2) The answer is option e.

The actual price in free market always move to the equilibrium price level by the interaction between market demand and market supply. In free market if the price is out of the equilibrium price level then the market price automatically reach to the equilibrium price level. For this reason except option e other options are not correct. Therefore, option e is the correct answer.

3) the answer is option b.

If the market price level is higher than the equilibrium price level then the quantity supplied become greater than the quantity demanded. As a result, the market face excess supply situation. For this reason except option b other options are not correct. Therefore, option b is the correct answer.