1. Consider a free market where the price is determined by the interaction of supply and demand and there is no government intervention to fix prices. Here are two statements, either of which may be true or false.

IIf the price is temporarily below the equilibrium price, the price will rise to eliminate the excess demand (shortage).

IIIf the price is temporarily above the equilibrium price, the price will fall to eliminate the excess supply (surplus).

Choose the correct option from the list below.

ANeither statement is true.

BOnly I is true.

COnly II is true.

DBoth statements are true.