In the figure above, if the price is $8 a unit, is there a shortage or surplus and what is the amount of any shortage or surplus?
What will be an ideal response?
At a price of $8 there is a surplus because the quantity supplied exceeds the quantity demanded. The amount of the surplus is 4 units per month.
You might also like to view...
If both demand and supply increase, price will
a. always increase b. always decrease c. increase only if supply increases more than demand does d. increase only if demand increases more than supply does e. decrease only if supply increases less than demand does
If the Fed wants a tighter monetary policy, it might:
A. sell government securities to reduce the federal funds rate. B. sell government securities to increase the federal funds rate. C. buy government securities to reduce the federal funds rate. D. buy government securities to increase the federal funds rate.
A durable good
A. is used up within 3 years. B. has a life span of more than 3 years. C. is an intangible commodity. D. has an infinite life span.
The Paradox of Financial Innovation states that:
a. What once was thought of as a "financial innovation" is really just old wine in a new bottle (i.e., nothing new). b.When a single firm, in isolation, tries to de-lever its balance sheet, the net effect is often for its leverage to rise. c. Financial innovation is a puzzle (i.e., a paradox) and always will be. d. When a large portion of the market tries to de-lever its balance sheet, asset prices fall, thereby causing leverage to increase (not decrease). e. If not fully understood by users and regulators, financial instruments that were created to reduce risk can end up increasing them.