Question

19. Price floors lead to market surpluses. 20. Shortages normally accompany an effective price floor. 21. Change in the price of a good causes the demand schedule for that good to shift. 22. Changes in consumer preference toward small, imported automobiles have shifted their demand curves downward and to the left. 23. An increase in consumer income will shift both the supply and demand curves. 24. "Equilibrium" is a situation in which there are no inherent forces to produce change. A minimum wage law may cause unemployment among low-skill workers. 25.

Answer 1

19. True- Price floors are the minimum price set by government that should be charged for a product. If the price floor is set above the equilibrium price then it will create market surplus because nobody will prefer buying it at such a high price.

20. False- When there is a shortage of food or any other product in market, there is no need for price floor. Customers will anyway buy it at whatever price it will be available. Thus, shortages do not bring the need for an effective price floor.

21. True- Changes in price shifts the demand for it. According to the law of demand, it completely applies here.

22. False- when the demand of small imported automobiles have been increased. Then the demand of the automobiles will shift to the right because it is increasing here.