ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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price set below the current equilibrium market price of a good
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price set above current equilibrium market price for a good
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shift of the demand curve
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shift of the supply curve
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Detailed explanation-1: -The correct answer is A price ceiling below the equilibrium price often leads to a Shortage of commodity and black marketing. When a price ceiling is set below the equilibrium price, quantity demanded will exceed quantity supplied, and excess demand or shortages will result.
Detailed explanation-2: -a price set below the current (or equilibrium) market price of the good.
Detailed explanation-3: -Case 2: The price ceiling is above the equilibrium price. In this case, there will be an overproduction of the quantity supplied, and a lower willingness to pay from consumers. This decreases the economic surplus and creates deadweight loss.
Detailed explanation-4: -What happens to equilibrium supply and demand if a price floor is set below the equilibrium price? Nothing happens. Since the floor is below equilibrium, the market is still able to determine the quantity and price the same way it always does.
Detailed explanation-5: -The correct answer is option e. A price that is below the equilibrium price and quantity in the market will lead to a shortage of supply.