Question: State whether each of the following statements is true or false and explain why. Be concise in your answer.
1. It is possible for a firm to have an absolute advantage in producing a good without having a comparative advantage in producing that good.
2. When demand shifts to the right, equilibrium price increases which causes supply to shift right.
3. When supply decreases, a shortage is initially created. In response, prices will begin to fall until a new equilibrium is reached.