How is the equilibrium price determined? What happens if the price is above the equilibrium price? What happens if the price is below the equilibrium price?
What will be an ideal response?
The equilibrium price is determined by the point where the demand curve and the supply curve intersect. At this point, quantity demanded and quantity supplied are equal. At a price greater than the equilibrium price there is an excess quantity supplied, or surplus since an increase in price leads to a reduction in the quantity demanded but an increase in quantity supplied. At a price below the equilibrium price there is an excess quantity demanded or shortage.
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If the CPI for year 1 was 106.1, while that for year 2 was 112.4, then the inflation rate for year 2 was:
(a) 5.9%; (b) 6.3%; (c) 5.6%; (d) 12.4%.
A positive temporary supply side shock will:
A. increase the level of potential output in the long run. B. decrease the price level in the long run. C. increase the price level in the long run. D. have no effect in the long run.
When a firm is experiencing economies of scale
A) the MP curve slopes upward. B) the LRAC curve slopes downward. C) diminishing returns to labor have been suspended. D) the MC curve slopes downward.
Ginny earns $575 per week working for Classy's Jewelry Store. Eric earns $450 per week working for Pillmart Pharmacy.
What will be an ideal response?