1 - “During 2013, the price of personal computers (PCs) fell drastically, but th

Question

1 - “During 2013, the price of personal computers (PCs) fell drastically, but the quantity supplied increased.” This statement …

suggests that the supply of PCs decreased during 2013.

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2- Which one of the following is an example of inadequacy, as defined in the text?

You cannot afford basic health care.

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refutes the so-called “law of supply.” b. ?. New Supply price price price Supply Supply Supply New Supply Demand New Demand Demand New Demand Demand quantity quantity quantity d. e. price price New Supply Supply Supply New Supply New Demand New Demand Dem and Demand quantity quantity Which graph illustrates a case in with the equilibrium price and quantity both clearly fall? O d

Explanation / Answer

1. refutes the so called 'law of supply'.

Clearly, we know that as price rises, the quantity supplied rises and vice versa. Here, there is an inverse relation. Also suply curve is always upward sloping (except for labor supply curve where it is backward bending).Thus options ,3,4 are invalid,

2. You cannot afford a new sports car.

Inadequacy means insufficiency or scarcity. Option 1 shows no sign of insufficiency as people are waiting to get the ticket because they know they will get it, Option 2 might be considered as a cause of inadequacy but not inadequacy in itself (it might lead to inadequacy later, as of now nothing is clear), Option 4 also shows no sign of inadequacy. Thus Option 3 is correct as you know that you can't afford a car because of inadequacy of funds.

3. Graph 'b' clearly shows a situation when both price and quantity falls. Leftward shift of the demand curve.

All the best :)

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