Question

5: Which of the following statements best describes how supply and demand functions?

Group of answer choices

A. Supply and demand enables the establishment of a price

B. Supply and demand is a market place.

C. Supply and demand is the intersection of supply and demand curves

D. They don t

6: When the government fixes a price below the market rate, what would be the most probable aberration?

A. The market would suffer surpluses

B. Less buyers would enter the market

C. The market would suffer shortages

D. The market works

7: If a price of a related good product substitute increase, the demand for that related good would -----------?

A. increase

B. decrease

C. stay the same

D. people would not notice

8: If the state you live in sets a minimum wage higher than the federal minimum, a probable outcome would be what?

A. people would stay in the state

B. there will be surplus of labor; i.e. unemployment

C. demand would increase for all goods and services.

D. the market would be in equilibrium

Answer 1

5. A. Supply and demand enables the establishment of a price

Explanation: The price is given by the point of intersection of the demand and supply curve.

6. C. The market would suffer shortages

Explanation: There will be a binding price ceiling because of which the quantity demanded would exceed the quantity supplied.

7.  A. increase

Explanation: The demand for a good increases when the price of its substitute increases.

8. B. there will be surplus of labor; i.e. unemployment

Explanation: The labor supplied would exceed the labor demanded due to the higher minimum wage.