22. A competitive market with flexible pricesand many buyers and sellers will: (

Question

22. A competitive market with flexible pricesand many buyers and sellers will: (Points: 3)
      eliminate surpluses.
       eliminateshortages.
       reach an equilibriumwhere the market has no surpluses or shortages.
       accomplish all of theabove.


23. If the quantity of housing supplied in acommunity is greater than the quantity of houses demanded, theexisting price: (Points: 3)
       is above the marketequilibrium price.
       will rise to clear themarket.
       will either rise orremain unchanged.
       is below the marketequilibrium price.

Explanation / Answer

(22) Since the market is competitive with flexible prices and manybuyers and sellers, it will not be affected by any small change indemand, supply and prices. Thus, all of the above will beaccomplished. So, the last choice is the answer. (23) Since there is surplus, the existing price will drop to reach a newequilibrium price. Thus, the existing price is above the marketequilibrium price. Hope this helps!

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