1) When there is a shortage in the market for a product, the quantity demanded is greater than the quantity supplied of the product at the market price, and the market price is less than the equilibrium price.

• A - True
• B - False

2) Assume that the market for plastic bags is in equilibrium. If there is a decrease in the price of an input used to make plastic bags which of the follow would occur?

• A - There would be a shift to the right of both the supply curve and the demand curve for plastic bags.
• B - The equilibrium price of plastic bags and the equilibrium quantity of plastic bags would both increase.
• C - The supply curve for plastic bags would shift to the right and the quantity demanded of plastic bags would increase.
• D - The demand curve for plastic bags would shift to the right and the supply curve for plastic bags would shift to the left.
• E - The quantity supplied of plastic bags would increase and the quantity demanded of plastic bags would decrease.

3) A country can have a comparative advantage in the production of a good relative to another country without having an absolute advantage in the production of the good.

• A - True
• B - False