4. Which is (are) correct? a. The demand curve shifts to the right and then the

Question

4.         Which is (are) correct?

a.         The demand curve shifts to the right and then the price increases.

b.         The price increases, and that makes the demand curve shift to the left.

c.         A change in income, the price of substitute, or the price of complements can shift the demand curve.

d.         Both a) and c) are correct.

e.         Both b) and c) are correct.

5.         The equilibrium price and quantity are a stable price and quantity assuming ceteris paribus.

a.         true

b.         false

6.         ___________ can prevent the equilibrium price from occurring.

a.         Both price floors and price ceilings

b.         Only price floors

c.         Only price ceilings

d.         Only free markets

Explanation / Answer

Ans

Both a and c are correct. As demand shifts right price will rise unless supply shifts rightwards more than demand. Income, price of substitutes etc are shift factors

5 True. They don't change until economic factors change

6 Both price floors and ceilings as here supply is either greater or less than demand

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