1. The change in the market is represented by an increase/decrease/no change in
ID: 1142932 • Letter: 1
Question
1. The change in the market is represented by an increase/decrease/no change in the demand and an increase/decrease/no change in supply (circle one for each)
2. The change in the market will result in a a)surplus b)shortage c)Unknown
3. In the market, the price the consumer pays will a) rise b)fall c)unknown
4. Because of the price change, the quantity demanded will a) rise b)fall c)unknown
5. Because of the price change, the quantity supplied will a) rise b)fall c)unknown
What is the equilibrium Market Price and Market Quantity when it settles at equilibrium?
Explanation / Answer
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Ans 1 No change in demand, Increase in supply
(because the country is importing bacon from abroad, the supply will rise)
Ans 2. Surplus because Supply>Demand
Ans 3. A tax of 50% on imports, raises the price, but as per the market conditions, there is a surplus. So, it depends on the magnitude of tax and excess supply resulting into fall in price.. So Unknown is right option.
If only tax is concerned, then the price will rise.
Ans 4. If there is surplus, price will fall and supply also falls.
If the price has increased due to tariff (tax on imports) supply rise.
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