Suppose that initially a market is in equilibrium at a price of $10 and a quantity of 5000 units per day. Several months later, the market is in a new equilibrium at a price of $5 and a quantity of 5000 units per day. What happened in the market?
What will be an ideal response?
For price to fall, either demand had to decrease or supply had to increase, or both. If demand decreased while supply remained constant, the quantity would have decreased too, and if supply increased while demand remained constant, the quantity sold would have increased. Therefore, both demand decreased and supply increased in such a way that the quantity did not change.
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In a perfectly competitive market, a firm in long-run equilibrium will be operating
A) to the right of the minimum of the long-run average cost curve. B) to the left of the minimum of the long-run average cost curve. C) at the minimum of the long-run average cost curve. D) at the minimum of the marginal cost curve.
Deregulation of the airline and trucking industry has (i) resulted in considerable entry of new firms, and (ii) has forced unions in these industries to make large concessions on wages and working conditions
a. i and ii b. i but not ii c. ii but not i d. neither i nor ii
Environmental regulation by the government
a. leads to ideal outcomes in most cases. b. is often based on goals for pollution levels that were determined by market signals. c. is most appropriate when the pollution of concern comes from many sources. d. is most likely to be economically efficient when the regulation provides substantial benefits for special-interest groups.
An increase in equilibrium quantity will result from each of the following except
A. an increase in supply and an increase in demand. B. an increase in demand and no change in supply. C. an increase in supply and no change in demand. D. a decrease in demand and a decrease in supply.