The market clearing price is
A) the price which eliminates excess quantity supplied or excess quantity demanded.
B) the price which leaves an excess quantity demanded.
C) the price which leaves an excess quantity supplied.
D) the lowest price at which a positive quantity supplied exists.
Answer: A
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A decrease in demand with the supply held constant leads to:
a. an increased equilibrium price and an increased equilibrium quantity. b. a decreased equilibrium price and a decreased equilibrium quantity. c. a decreased equilibrium price and an increased equilibrium quantity. d. an increased equilibrium price and a decreased equilibrium quantity.
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the short run would be:
A. P3 and Y1. B. P2 and Y1. C. P2 and Y3. D. P1 and Y2.