When demand remains the same and supply decreases the same, the new equilibrium

Question

When demand remains the same and supply decreases the same, the new equilibrium price (increases, decreases, indeterminate) and the the equilibrium quantity (increases, decreases, indeterminate) When demand increases and supply decreases but the supply shift is larger, the new equilibrium price (increases, decreases, indeterminate) If supply and demand establish a price for a good so that there is no shortage or surplus of the product, then price is successfully performing its (utility, rationing) function. The price that is set is a market (changing, clearing) price. A competitive market produces two types of efficiency: goods and services will be produced in the least costly way, so there will be (allocative, productive) efficiency. A price ceiling is the (minimum, maximum) legal price a seller may charge for a product or service, whereas a price floor is the (minimum, maximum) legal price set by government. If a price ceiling is below the market equilibrium price, a (surplus, shortage) will arise in a competitive market, and if a price floor is above the market equilibrium price, a (surplus, shortage) will arise in a competitive market.

Explanation / Answer

(14) New price increases, and new quantity decreases

(15) Price increases, quantity decreases

(16) Price increases, quantity indeterminate

(17) Price is performing its Rationing function. Price is set in a Market clearing price.

(18) Productive efficiency, Allocative efficiency

(19) Price ceiling is maximum legal price & price floor is the minimum legal price

(20) If ceiling price is below equilibrium price, a shortage will arise. If floor price is above equilibrium price, a surplus will arise.

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