Economics True/False

True.
Explanation:
A horizontal straight line supply curve implies that the quantity supplied can be adjusted to the change in demand. With the increase in demand, with no corresponding increase in price, equilibrium quantity will increase.

False.
Explanation:
With an increase in income of buyers, equilibrium price will increase when piece of goods is normal, but decreases when that is inferior.

False.
Explanation:
Increase in supply implies a rightward shift of the supply curve. New supply curve will intersect the given demand curve at a lower price. The equilibrium price will fall; equilibrium quantity will rise.

False.
Explanation:
A vertical straight line supply curve implies that the quantity supplied cannot be changed. If the demand increases, equilibrium price will increase proportionately.

False.
Explanation:
When demand increases proportionately more than increase in supply, equilibrium price will rise.

False.
Explanation:
When there is excess demand, equilibrium price is greater than prevailing price.

False.Explanation:
This is so because it is not the minimum price ceiling but maximum price ceiling which must be accompanied by rationing, in order to be more effective.

True.
Explanation:
Increase in demand implies a rightward shift of the demand curve. New demand curve will intersect the given supply curve at a higher price. The equilibrium price will rise.

False.
Explanation:
Market equilibrium is obtained when the quantity supplied of a commodity equals the quantity demanded. If the quantity demanded of a commodity is less than the quantity supplied, equilibrium price will fall.

False.
Explanation:
An equilibrium between demand and supply determines only equilibrium price.

False.
Explanation:
With a decrease in supply proportionately more than demand, equilibrium price will rise.

False.Explanation:
When market price of a good is more than its equilibrium price, there will be competition among sellers because of increase in unsold stock level. It creates a situation of excess supply.

True.
Explanation:
Maximum price ceiling refers to the market regulation which holds the market price below the equilibrium price. It is a policy which helps the poor people to buy the necessities at lower prices.

True.
Explanation:
As we know whether demand increases or supply decreases both lead to an increase in equilibrium price. Hence, equilibrium price will rise.

False.
Explanation:
Floor price is a law which holds the market price above the equilibrium price. This policy helps the farmers to sell whatever they produce and guarantee them a minimum income.

False.
Explanation:
When there is excess supply, equilibrium price is less than prevailing price.

True.Explanation:
When equilibrium price of a good is less than its market price, it creates a situation of excess supply which will lead to competition among the sellers who will like to dispose off their unsold stock.

True.
Explanation:
Decrease in demand results in a fall in equilibrium price; decrease in supply, on the other hand, results in an increase in price. If both the changes are proportionately equal, equilibrium price will not change.

True.
Explanation:
As we know whether demand decreases or supply increases both lead to an decrease in equilibrium price. Hence, equilibrium price will fall.