The supply and demand model
a. tries to include as many realistic details as possible in order to provide insights into real-world competitive markets
b. uses simplifying assumptions while still providing insights into real-world competitive markets
c. uses simplifying assumptions that severely limit its usefulness in practice
d. is too complicated to be useful in practice
e. is unable to explain price movements in most real-world competitive markets
B
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In a competitive market, a negative externality creates a deadweight loss because
A) the cost of the externality is double counted. B) a harm is generated. C) price equals social marginal cost. D) price equals private marginal cost.
In the labor market, if the government imposes a minimum wage that is below the equilibrium wage, then
A) workers who wish to work at the minimum wage will have a difficult time finding jobs. B) firms will hire fewer workers than without the minimum wage law. C) some workers may lose their jobs as a result. D) nothing will happen to the wage rate or employment.
International equilibrium occurs if the quantity of imports demanded by one country is equal to the quantity of exports supplied by the other country
a. True b. False Indicate whether the statement is true or false
Government can play a crucial role in promoting economic efficiency by
a. taxing income b. providing physical and institutional infrastructures c. establishing price ceilings to help certain buyers d. establishing price floors to help certain sellers e. creating barriers to market entry whenever there is a threat of excessive competition