Which One of the Following Correctly Describes How Price Adjustments

question 56

Multiple Choice

Which one of the following correctly describes how price adjustments eliminate a surplus?

• A) As the price rises, the quantity demanded will increase while the quantity supplied decreases.
• B) As the price falls, the quantity demanded will decrease while the quantity supplied increases.
• C) As the price falls, the quantity demanded will increase while the quantity supplied decreases.
• D) As the price rises, the quantity demanded will decrease while the quantity supplied increases.

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Definitions:

Tractors

Heavy vehicles designed for agricultural use, mainly for plowing, tilling, and planting fields.

Autarky

An economic system where a country or entity is self-sufficient and does not engage in trade with external parties.

Comparative Advantage

The capability of an entity to generate a product or service with a lesser opportunity cost compared to others, resulting in enhanced trading efficiency.

Consumption Point

A specific point on a budget constraint that shows the combination of two goods that a consumer can afford.