The Market System Automatically Corrects a Surplus Condition in a Competitive

question 32

Multiple Choice

The market system automatically corrects a surplus condition in a competitive market by

• A) raising the price of the commodity in question while increasing the quantity demanded.
• B) raising the price of the commodity in question while decreasing the quantity demanded.
• C) reducing the price of the commodity in question while increasing the quantity demanded.
• D) reducing the price of the commodity in question while decreasing the quantity demanded.

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Definitions:

Inflation

The magnitude of growth in general service and product prices, causing a decrease in the ability to buy.

Overall Level

A general or comprehensive scope or scale, often referring to the magnitude or intensity of a phenomenon or activity.

Prices

The financial outlay necessary for acquiring a commodity, service, or asset.

U.S. Productivity

A measure of the efficiency of production in the United States, typically evaluated in terms of the output of goods and services per unit of labor input.