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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
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
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