Question 21 Consider the attached Figure What is the expecte

Question 21 Consider the attached Figure. What is the expected outcome in the market if price is at $15? 15 10 0 100 200 400 600 700 0 a. There will be a surplus and price will increase b. There will be a shortage and price will increase Oc. There will be a surplus and price will decrease d. There will be a balance and price will decrease e. None of the above

Solution

Ans21) C is the correct option. There will be a surplus and price will decrease. Since at price 15th quantity supplied exceeds the quantity demanded so there will be surplus in the market

Ans22) the correct option is both (a) and (b). Economist consideres cetirus peribus assumption, all things remain constant assumption. Economist also assumes consumer behaves rationally.

Ans24) the correct option is a and b. The theory is a set of interrelated concepts or definitions that present a systematic view of events by specifying relations among variables