Question

1. The supply curve is a graphic representation of a supply schedule that integrates the quantity of supply with a series of alternative prices.

True

False

2. At the equilibrium price, there is no pressure (market force) on the price to either rise or fall.

True

False

3. When a shortage exists in a market, the actual price would be greater than (above) the equilibrium price.

True

False

Answer 1

1) TRue that supply curve is a graphical representation of quantity supplied of a good at different prices. The supply curve shows the positive relation between quantity supplied and price of a commodity. Greater the price, greater is the profit for the producer and greater is the amount supplied by him.

2) True at the equilibrium price, there is no pressure (market force) on the price to either rise or fall. There is balance in the market.

3) When a shortage exists in a market, demand exceeds supply and the actual price would be lower than (below) the equilibrium price.Hence the statement is false.