If parity prices are "fair" they will not cause a market surplus.
Answer the following statement true (T) or false (F)
False
Price supports have always been the primary focus of U.S. farm policy. As early as 1926, Congress decreed that farm products should sell at a fair price. By 'fair' Congress meant a price higher than the market equilibrium. A price floor creates a market surplus or excess supply.
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Market failures occur when
A) externalities exist. B) economic efficiency increases. C) there is an increase in demand. D) there is a change in quantity demanded.
In the short run, a perfectly competitive firm will always shut down if, at all output levels above zero,
a. price is less than average total cost b. total revenue is less than total cost c. they cannot pay variable costs with total revenue d. variable cost is greater than fixed cost e. price is less than fixed cost
Idiosyncratic risk:
A. can not be eliminated through diversification. B. is unique to a particular company or asset. C. is not generally absent from index funds. D. All of these are true.
Answer the following questions true (T) or false (F)
1. Market equilibrium occurs where supply equals demand. 2. A shortage occurs when the market price is lower than the equilibrium price. 3. A shortage is defined as the situation that exists when the quantity of a good supplied is greater than the quantity demanded.