1. If the market for a certain product experiences an increase in supply and a d

Question

1. If the market for a certain product experiences an increase in supply and a decrease in
demand, which of the following results is expected to occur?
a. Both equilibrium price and the equilibrium quantity could rise or fall.
b. Equilibrium price would rise, and the equilibrium quantity could rise or fall.
c. Equilibrium price would fall, and the equilibrium quantity could rise or fall.
d. Equilibrium price would fall, and the equilibrium quantity would fall.
2. Suppose there are nine sellers and nine buyers, each willing to buy or sell one unit of a
good, with values {$10, $9, $8, $7, $6, $5, $4, $3, $2}. Assuming no transactions costs
and a competitive market, what is the equilibrium price in this market?
a. $5
b. $6
c. $7
d. $8

Explanation / Answer

c. Equilibrium price would fall, and the equilibrium quantity could rise or fall. b. $6

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