Question

Need help please,

1. Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

A

The statement would be correct if "quantity of wheat demanded" were substituted for "quantity of wheat supplied."

B

The statement is incorrect because it confuses a change in quantity supplied with a change in supply.

C

The statement would be correct if it read that a "decrease in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

D

The statement is correct.

2.Fill in the blank with the correct answer by typing in the box. When the price is below equilibrium, where quantity demanded exceeds the quantity supplied, this is a _____________.

3.When quantity demanded decreases in response to a change in price,

Use letters in alphabetical order to select options

A

the demand curve shifts to the left.

B

the demand curve shifts to the right.

C

there is a movement up along the demand curve.

D

there is a movement down along the demand curve.

4.Select whether the statement is true or false.

When an economic event causes demand or supply to shift, prices and quantities will move in the general direction of equilibrium.

Use letters in alphabetical order to select options

A

true

B

false

Answer 1

1. Ans: The statement is correct.

Explanation:

According to law of supply, there is a positive or direct relationship between price of a good and it quantity supplied. Thus, the statement is correct.

2. Ans: Excess demand

3. Ans: there is a movement up along the demand curve.

Explanation:

The demand curve shows the relationship between price and quantity demanded of a good.According to law of demand, there is a negative or inverse relationship between price of a good and it quantity demanded. Quantity demanded will decrease when price increases. So, there is a movement up along the demand curve.

4. Ans: False

Explanation:

When an economic event causes demand or supply to shift, prices and quantities set off in the general direction of equilibrium.

Thus, the statement is false.