Question

Week 3 - Market Equilibrium Please explain the answer to the following true or false questions. Surplus is the quantity supplied If there is a surplus of a good its price rises, skeds the quartz clem If both demand and supply curves shift rightward then equilibrium quantity increases. quantity demanded equals the quantity supplere Ah increase in demand lowers the equilibrium price in the market. Equilibrium Price is the price at which the If demand increases and supply increases the equilibrium price of the good will always go up relative to its old level. Trice no change quantity increase The equilibrium price is the price level at which there is no surplus or shortage in the market. DI 5 T

Answer 1

1. False-

Price falls when there is surplus as quantity supplied is greater than Quantity demanded.

2. True-

When both quantity demanded and quantity supplied rises, equilibrium quantity rises.

3. False-

Increase in demand with no change in supply leads to increase in price.

4. False-

When both quantity demanded and quantity supplied rises, equilibrium price can rise, fall or remain unchanged.

5. True-

At equilibrium Price, Quantity demanded is equal to quantity supplied. So there is no shortage and no surplus.

6. False-

Change in market supply affects Equilibrium Price.

When Supply rises, price falls and vice versa.

7. True-

Product price is determined where market quantity demanded is equal to market quantity supplied.

8. False

When Supply decreases, price rises and QUANTITY demanded falls not demand. There is no shift of demand curve due to change in supply.

9. True-

There is positive relationship between price and demand of substitute good.

10. True

There is negative relationship between price and demand of complementary good.

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