Question

Consider the table above. If the price in the market is initially set at $2, what is the result in the market, and what will eventually have to happen to move the market to equilibrium?

a. Shortage, price increase

b. Shortage, price decrease

c. Surplus, price increase

d. Surplus, price decrease

Suppose a market is initially in equilibrium. Then a change occurs and the equilibrium price decreases while the equilibrium quantity increases. What change occurred in the market to cause these changes to price and quantity?

a. Decrease in demand

b. Increase in demand

c. Decrease in supply

d. Increase in supply

Suppose the market for a good is initially in equilibrium, and then a shock occurs which causes the demand to increase. Which of the following responses do we expect in the market?

a. A movement to the left along the supply curve

b. A movement to the right along the supply curve

c. The supply curve will shift left d. The supply curve will shift right

d. The supply curve will shift right

Answer 1

1. ANS:

Given data,

The price of the initial market =$2

in this given options the option A is correct

at price=$2

demand=1000

supply=700

when the demand is more than supply,

there will be a shortage and price should go up to maintain equilibrium

ANS:A)SHORTAGE;Price increase

2.

In this given option c is correct

Decreasing the supply is the change is occurred in the market to cause these changes to price and quantity .

ANS:C)DECREASING THE SUPPLY

3.

In this given options D is the correct option

The market for a good is initially in equilibrium and then a shock occurs.

In that time The supply cure will shift right

This is the responses we are expect in the market.

ANS: D)THE SUPPLY CURVE WILL SHIFT RIGHT