T or F

If the US has a comparative advantage, they must also have an absolute advantage in the same product.

False

T or F

If golf clubs and golf balls are complements a reduction in the price of golf clubs will inrease the demand for golf balls.

True

T or F

When the price of a good is below the equilibrium price, it causes a surplus

False

T or F

If there is a shortage of a good, then the price of that good will tend to fall as a result of market forces.

False

Market

a setting in which buyers and sellers of a product interact and engage in voluntary transactions

Equilibrium

Price at which Qs=Qd

Shortage

Qd > Qs at a given price

Surplus

Qs > Qd at given price

T or F

The law of demand states that an increase in the price decreases the demand for that good.

False

T or F

If there is an increase in supply acompanied by a decrease in demand for coffee, then there will be a derease in both the equilibrium prie and the quantity

False

Price floor

transactions cannot occur BELOW this regulated price

Price Ceiling

transactions cannot occur ABOVE this regulated price

Binding price floor

Set ABOVE equilibrium price

Binding price ceiling

price must be set BELOW equilibrium price