Assume That the Equilibrium Price for a Good Is $5

question 158

Multiple Choice

Assume that the equilibrium price for a good is $5. If the market price is $10, a:

• A) shortage causes the price to decline toward $5.
• B) surplus causes the price to rise above $10.
• C) shortage causes the price to rise above $10.
• D) surplus causes the price to decline toward $5.

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Definitions:

Service

An activity, or intangible product, used to satisfy human wants.

Resource Market

A market in which a resource is bought and sold.

Exchange

The act of giving one thing and receiving another, especially of the same kind or value, in return.

Scarce

A condition or situation characterized by the limited availability of resources or goods, leading to competition for their acquisition or use.