Question

How do price changes effect equilibrium

A:by serving as a tool for distributing goods and services

B:by preventing inflation or deflation from affecting the supply of goods

C:by assisting the centrally planned economy

D:by limiting the market to people who have the most money

Answer 1

A decrease in demand and an increase in supply will cause a fall in equilibrium price, but the effect on equilibrium quantity cannot be determined. 1. For any quantity, consumers now place a lower value on the good, and producers are willing to accept a lower price; therefore, price will fall.

Answer 2

A: by serving as a tool for distributing goods and services

Step-by-step explanation:

Supply and demand x good determine the equilibrium price in the perfect competitive market. The equilibrium price is defined as the price that equals the quantities demanded by buyers and the quantities offered by sellers, so that both groups are satisfied.

Given that the appropriate solution to this shortage, which would be to raise the market price, is not possible because it is tabulated, there is no alternative but to administer the shortage.