Which of the following is true?
A) If the price of a substitute rises, the demand curve shifts leftward.
B) An increase in the cost of producing a good shifts the demand curve leftward.
C) An increase in population shifts the demand curve leftward.
D) If people expect the price of a good will rise in the future, the demand curve shifts leftward.
E) For an inferior good, when income increases, the demand curve shifts leftward.
E
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A market is perfectly competitive if
A) each firm in it can influence the price of its product. B) there are many firms in it, each selling a slightly different product. C) there are many firms in it, each selling an identical product. D) there are few firms in the market.
Suppose the equilibrium price of milk is $3 per gallon but the federal government sets the market price at $4 per gallon. The market mechanism will force the milk price back down to $3 per gallon unless the government:
A) rations the excess demand for milk among consumers. B) buys the excess supply of milk and removes it from the market. C) Both A and B are plausible actions. D) The government cannot maintain the price above the equilibrium level.