At prices above the equilibrium price, what occurs?
What will be an ideal response?
If the price exceeds the equilibrium price, there is a surplus because the quantity supplied exceeds the quantity demanded. With a surplus, the law of markets points out that the price will fall. As the price falls, the quantity supplied decreases and the quantity demanded increases, thus decreasing the size of the surplus. The price will continue to fall as long as there is a surplus, that is, as long as the price exceeds the equilibrium price. Ultimately the price will fall to equal the equilibrium price, at which time the surplus will be eliminated and the price will no longer change.
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Inflation reduces the multiplier effect by reducing consumers’ wealth and purchasing power.
Answer the following statement true (T) or false (F)
With respect to events like global warming, some economists suggest using falling discount rates because
A) exponential discounting virtually gives no weight to (large) costs incurred far into the future. B) exponential discounting weights (large) costs incurred far into the future heavily. C) events far in the future do not affect us. D) we should not care about costs far in the future.
Barter requires:
a. that the exchanged goods be portable. b. that the exchanged goods be durable. c. a coincidence of wants. d. that the exchange medium be divisible. e. an effective middleman.
Use the following scenario for the question below. A group of 100 people seeks out an insurance company to underwrite health insurance for its members. The expected medical spending for the group is $150,000. What will the average premium be if the health insurance company estimates the premium adding net loading costs of 15 percent?
a. $1,200 b. $2,250 c. $1,500 d. $1,725 e. $1,765