Multiple choice

Which of the following predictions is not made by supply and demand theory?

  1. If there is excess demand, price will rise.

  2. If there is excess supply, price will fall.

  3. If there is no excessive demand or supply, market will be in equilibrium stage.

  4. A market which is out of equilibrium will always move rapidly towards the equilibrium.

  5. If price increases, demand falls.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

This is not a prediction of demand or supply theory.

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