Answer the following questions true (T) or false (F)
1. If the demand for a product increases and the supply of the same product decreases, the equilibrium price will increase.
2. If the demand for a product decreases and the supply of the same product increases, the equilibrium quantity will increase.
3. As the number of firms in a market increases, the supply curve will shift to the left and the equilibrium price will rise.
1. TRUE
2. FALSE
3. FALSE
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When two goods are substitutes, a shock that raises the price of one good causes the price of the other good to
A) remain unchanged. B) decrease. C) increase. D) change in an unpredictable manner.
A firm's capital is measured as a ________ while investment in new capital is measured as a ________.
A. stock; flow B. flow; stock C. physical amount; dollar value D. stock; change
With a proportional tax, higher-income persons will pay
A. a higher proportion of their income in taxes than lower-income persons. B. the same amount of taxes as lower-income persons. C. a higher marginal tax rate as their incomes rise. D. a bigger amount in taxes compared to lower-income persons.
In 1990, Britain joined the ERM. If the German Bundesbank increased interest rates, assuming Britain maintains its exchange rate peg, the likely impact on the British economy would be a(n):
A) recession. B) inflationary economy. C) stronger pound. D) decrease in taxes.