Suppose supply decreases, but there is no change in demand. As the market reaches its new equilibrium:
A. excess supply will lead the price to fall.
B. excess demand will lead the price to fall.
C. excess supply will lead the price to rise.
D. excess demand will lead the price to rise.
Answer: D
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Fractional reserve banking is a system in which
A) depository institutions pay a fraction of advertised interest rates. B) a fraction of banking services must be provided by depository institutions. C) depository institutions hold a fraction of total deposits in reserve. D) the money supply is a set fraction of the U.S. gold reserves.
A devaluation of a currency means that the exchange rate (price of that currency) has changed to a lower fixed rate
a. True b. False
A political failure of a trade embargo is most likely to occur if
A. the target country is a dictatorship and the dictatorship is jeopardized by retreating from the policy that provoked the embargo. B. the embargo imposes more damage on the target country than on the country imposing the embargo. C. the target country is a colony of the imposing country and the embargo adversely affects the imposing country. D. the imposing country is a relatively smaller country than the target country in terms of trade volume.
The market demand in a Bertrand duopoly is P = 10 ? 3Q, and the marginal costs are $1. Fixed costs are zero for both firms. Which of the following statement(s) is/are true?
A. Profits of firm 1 = profits of firm 2. B. Producer's surplus of firm 1 = producer's surplus of firm 2. C. P = $1. D. All of the statements associated with this question are correct.