ECONOMICS
PRICE CEILINGS AND FLOORS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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equilibrium price increases as quantity change is indeterminate
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equilibrium price increases as quantity change is indeterminate
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equilibrium price change is indeterminate as quantity increases
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equilibrium price change is indeterminate as quantity decreases
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equilibrium price increases as quantity increases
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Detailed explanation-1: -A decrease in demand will cause the equilibrium price to fall; quantity supplied will decrease. An increase in supply, all other things unchanged, will cause the equilibrium price to fall; quantity demanded will increase. A decrease in supply will cause the equilibrium price to rise; quantity demanded will decrease.
Detailed explanation-2: -An increase in demand and a decrease in supply will cause an increase in equilibrium price, but the effect on equilibrium quantity cannot be detennined. 1. For any quantity, consumers now place a higher value on the good, and producers must have a higher price in order to supply the good; therefore, price will increase.
Detailed explanation-3: -When supply and demand move in the same direction, price is indeterminate. That is because an increase in supply decrease price while an increase in demand will increase price.
Detailed explanation-4: -A decrease in demand puts downward pressure on both equilibrium price and quantity. Thus, an increase in supply and decrease in demand both push price down but push quantity is opposite directions which results in a decrease in equilibrium price and an uncertain change in equilibrium quantity.
Detailed explanation-5: -If demand decreases and supply increases, then the: a) price will rise but the effect on equilibrium quantity will be indeterminate.