Increase the gains from the trade and efficiency of market

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Reference no: EM131391871

1. In a price taker markets, imposition of price ceiling (of $1) below the equilibrium price (of $2) will cause producers to expand output. This will thereby increase the gains from the trade and the efficiency of the market.

True or False

2. In markets which are described by the price searcher with low entry barrier model(monopolistic competition), if consumer demand for a product increases, in the short run firms will earn economic profits and will respond by increasing the quantity they produce.

True or False

3. In price taker markets, imposition of a price floor(of $5) above the equilibrium price (of $4) will result in consumers buying less output.

True or False

Reference no: EM131391871

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