Discuss how a market reaches equilibrium. How is it expressed graphically?
What will be an ideal response?
Equilibrium exists at that one price in a market where the quantity demanded equals the quantity supplied. This is shown graphically at the point of intersection between demand and supply curves. At any price above equilibrium, a surplus is observed, which pushes the price down until equilibrium is established. Any price below equilibrium creates a shortage and the price rises until the shortage is eliminated.
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The federal budget has three components. Name them
What will be an ideal response?
When the price of bananas rises 2 percent, the quantity demanded of peanut butter falls 4 percent
a. What is the cross elasticity of demand between these two goods? b. How are these goods related? c. If the price of bananas rises, how will that affect the demand curve for peanut butter?
When the U.S. Treasury purchases gold from a member of the non-bank public, the immediate effect is that __________ and __________
A) reserves increase; currency in circulation decreases B) reserves decrease; currency in circulation increases C) reserves increase; Treasury deposits decrease D) reserves decrease; Treasury deposits increase
Perfectly competitive markets are not the most efficient type.
Answer the following statement true (T) or false (F)