Suppose Demand Decreases, but There Is No Change in Supply

question 177

Multiple Choice

Suppose demand decreases, but there is no change in supply. As the market reaches its new equilibrium:

• A)excess demand will lead the price to rise.
• B)excess supply will lead the price to rise.
• C)excess demand will lead the price to fall.
• D)excess supply will lead the price to fall.

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Definitions:

Exponential Distribution

A probability distribution that describes the time between events in a process where occurrences happen at a constant rate.

Proportion

A portion, segment, or fraction when evaluated in relation to its entirety.

Chi-squared Curve

Describes the distribution of a chi-squared statistic, used in hypothesis testing to determine how well observed data fit with expected data.

Degrees of Freedom

The number of independent values or quantities that can vary in the analysis without violating any constraints.