Assuming no government intervention, describe the market behavior that should result if the price of a product is below its equilibrium price; then describe the behavior that should occur if the price is above its equilibrium price
Please provide the best answer for the statement.
If the price of a product is below its equilibrium price, the quantity demanded will be greater than the quantity supplied and the price will be bid up as buyers compete to obtain the product and sellers realize that they can raise the price. As the price rises, the quantity supplied will increase and the quantity demanded decrease until the two are equal at the so-called equilibrium or market-clearing price.
If the price of a product is above its equilibrium price, the quantity supplied will be greater than the quantity demanded and a temporary surplus exists. As sellers compete, the price will fall and the quantity demanded will increase and the quantity supplied will decrease until the two are equal at the equilibrium or market-clearing price.
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You can spend $10 for lunch and you would like to purchase two cheeseburgers. When you get to the restaurant, you find out the price for cheeseburger has increased from $5 to $6, so you decide to purchase just one cheeseburger. This is best described as:
A. the income effect of a price change. B. a decrease in the buyer's reservation price. C. the substitution effect of a price change. D. an increase in the buyer's reservation price.
The basic principle that a country should treat imports from all other countries the same way is
a. quantitative restriction b. export orientation c. most favored nation d. free-trade area e. none of the above
Exhibit 36-2 Stock High Low Close Net chg. Dasher 17.25 16.75 17.00 (A) Dancer 34.85 34.25 (B) +0.25 Prancer 56.50 55.90 56.00 (C) Vixen 65.90 (D) 64.75 -0.75 Refer to Exhibit 36-2. If the closing price of Dasher's stock on the previous day was $17.50, what value goes in blank (A)?
A. -0.50 B. +0.50 C. -0.25 D. -0.75 E. There is not enough information given to answer this question.
The backward-bending supply curve for labor shows how an increase in wages affects the number of hours worked. The “backward bend” is the part of the curve that shows that some people:
a. have no flexibility in the number of hours they work. b. work more hours when income rises. c. work more hours when income falls. d. work fewer hours when income rises.