If the demand for a product remains the same and the supply falls,
A) the market clearing price will fall and the equilibrium quantity will rise.
B) the market clearing price will rise and the equilibrium quantity will fall.
C) both the market clearing price and the equilibrium quantity will fall.
D) both the market clearing price and the equilibrium quantity will rise.
B
You might also like to view...
Which of the following will happen if a firm in a duopoly with homogeneous products increases its price above its marginal cost once a Nash equilibrium is reached?
A) The firm will earn huge economic profits. B) The firm will gain market share. C) The firm will lose all its customers to its rival. D) The firm will continue to earn zero economic profits.
As more people started using fax machines, fax machines became more valuable to individual users. This is an example of a(n) ________
A) moral hazard B) adverse selection C) network externality D) negative externality
Suppose all firms have constant marginal costs that are the same for each firm in the short run. In this case, the market level supply curve is ________ and producer surplus equals ________:
A) perfectly inelastic, fixed costs B) perfectly inelastic, zero C) perfectly elastic, fixed costs D) perfectly elastic, zero
The demand for Dell laptops is more price elastic than the demand for laptops as whole. This is best explained by
a. There are fewer substitutes for Dell laptops than for laptops as whole b. There are more substitutes for Dell laptops than for laptops as whole c. Dell laptops are luxurious goods d. Dell laptops are a necessity