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TF1. TF2. TF3. T F 4, TF5. TF6. TF7. A shortage in the market will cause...


TF1. TF2. TF3. T F 4, TF5. TF6. TF7. A shortage in the market will cause market prices to fall. Demand curves reflect potenti
TF1. TF2. TF3. T F 4, TF5. TF6. TF7. A shortage in the market will cause market prices to fall. Demand curves reflect potential behavior only of buyers of a good or service, not of sellers. A lower price leads to greater demand by the law of demand. Shortages or surpluses will always drive prices back to equilibrium. A leftward shift of the supply curve is the same as an increase in supply The law of supply represents the positive relationship between price and quantity supplied. Changes in technology, prices of resources, profitability of alternative pursuits, taxes, number of sellers, and expectations cause market supply curves to shift. When a U2 concert sells out, the market for U2 tickets is always in equilibrium because the number of tickets sold equals the number of tickets that are bought. TF8. Which of the following can bring about a change in the quantity demanded? (a) change in supply (b) change in quality (c) change in income (d)change in product price 9. When firms advertise their products, they are attempting to (a)shift the supply curve to left shift the supply curve to the right (c) shift the demand curve to the left 10. (d) shift the demand curve to the right 11. The development of new technology typically (a)shifts the supply curve to left (b)shifts the supply curve to the right (c) shifts the demand curve to the left (d) shifts the demand curve to the right 12. If both demand and supply increase (a) quantity will certainly go down (b)quantity will certainly go up (c) price will certainly go down (d) price will certainly go up Market supply and demand curves both have determinants which depend on (a) Technology (b) The price of other goods. (c) The price of the good itself (d) Income 13. 14. A supply schedule is composed of: (a) Price and the quantity supplied of a good. (b) Price and supply of a good. (c) Prices of another good with the quantity supplied of a good. (d)None of the above.
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Answer #1
  1. A shortage in market will cause the market prices to rise. This is because there will be competition among the buyers to get the product. The competition among the buyers will raise the price. The statement is False.
  2. Demand curve reflect the buying behavior at different prices. It has no relation to the behavior of the sellers. Thus the statement is True.
  3. Law of demand states other things remaining constant, a fall in price will lead to increase in quantity demanded and vice versa. Thus the statement is True that a fall in price will increase the quantity demanded.
  4. Any shortage at a price lower than equilibrium will cause the price to go up and a surplus will lead to excess supply lying in the market forcing the sellers to reduce the price to the equilibrium level. Thus both the situations will bring the price back to the equilibrium. The statement is True.
  5. A leftward shift in supply means there is a decrease in supply at the current ptice level. this is due to changes in factors other than own price of the commodity. The statement is False.
  6. Law of supply states other things remaining constant, the price and quantity supplied are directly related. That is an increase in own price will lead to increase in quantity supplied and vice versa. The statement is True.
  7. A change in any factor other than own price will lead to shift in the supply curve. The statement is True.
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