Figure 31 10 20 30 40 QuantityTime 13 Which of the following

Figure 3-1 10 20 30 40 Quantity/Time 13. Which of the following is true regarding the market for steak shown in Figure 3-1? a. If the price of steak were $2 per pound, producers would want to supply less steak than b. If the price of steak were S4 per pound, producers would want to supply more steak than c. If the price of steak were S3 per pound, producers would want to supply the same amount d. All of the above are true regarding the market for steak shown in the figure. consumers would want to buy. consumers would want to buy. of steak that consumers would want to buy.

Solution

13. d) All of the above are true regarding the market for steak shown in the figure.

At price less than equilibrium, there is increase in excess demand as quantity demanded is greater than quantity supplied. At price greater than equilibrium, there is excess supply as quantity supplied is greater than quantity demanded.

14. c) $ 6 per pound.

Equilibrium price is the price where demand and supply intersects.

15. c) a movement upward to the left along the original demand curve.

Change in price causes movement of demand curve rather than shift of curve.

16. b) a shift in the demand curve to D₃.

Decrease in the price of butter increases demand of butter while decreases the demad of margarine. When demand increases due to change in factors other than price then it causes shift in demand curve.