2. In a competitive market, if the current price is below the equilibrium price, thenPthere is a surplus.SDO there is no tendency for the price to change if from its current level.there is a shortage.none of the other options.there is a tendency for the price to decrease from its current level.

Demand curve represents quantity demanded at different price levels. It is downward sloping because…

Answered: 2. In a competitive market, if the…

Business

Economics

2. In a competitive market, if the current price is below the equilibrium price, then P

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 9SCQ: Suppose the cross-price elasticity of apples with respect to the price of oranges is 0.4, and the...

See similar textbooks

Related questions

Q: What is anti-oppressive social work practice?

A: Anti-oppressive social work practice focuses on combating systemic inequalities and empowering…

Q: WAGE (Dollars per hour) 16 14 12 10 2 0 Supply Demand 0 200 400 600 800 1000 1200 1400 1600 LABOR…

A: The government set a maximum and minimum price for products on the market. The regulation of these…

Q: Refer to the below figure. What is the firm's fixed cost when the market price is $3.25? Price ($)…

A: Total cost is the sum of fixed cost and variable cost.=> TC = FC + VC Fixed cost is the cost that…

Q: Advantages of market economies over command economies is that market economies O are more efficient,…

A: Market economies and command economies represent two distinct economic systems with differing…

Q: Consider a competitive market in which the MPB = 129-3q and the MSC =3q. In this market, however,…

A: The market equilibrium quantity is where the private marginal benefit curve intersects the private…

Q: According to the rational expectations model, how would an announcement of expansionary monetary…

A: An expansionary Policy:An expansionary policy is a monetary policy where the money supply is…

Q: Suppose that the price of oranges is $1 per unit and the price of pencils is $70 per unit. In…

A: Budget constraint shows the relationship between the two goods, their prices and the income of the…

Q: 8. Natural monopoly analysis The following graph gives the demand (D) curve for satellite TV…

A: A single-seller market that decides its own price is called a monopoly market. Marginal revenue is…

Q: A large standby electricity generator in a hospital operating room has a first cost of $61,000 and…

A: The annual worth measures the overall cost of an investment or project over its lifespan. It…

Q: The following table gives the quantity of money demanded at various price levels (P), the money…

A: Equilibrium in the money market takes place at the intersection of the money demand and money supply…

Q: From 1970 to 2017, the real price of a college education increased, and total enrollment increased.…

A: The demand is defined as the desire of an individual to buy a product. The individual must have…

Q: What economic theories are most useful when applied to the healthcare industry and why?

A: Healthcare economics theory examines the allocation of resources and decisions-making in the…

Q: Suppose Canada's economy is in a long run equilibrium with real GDP equal to potential output Now…

A: Aggregate demand is the sum of consumption, investment, government spending and net export. This…

Q: Figure 4 9000 Expenditures 6000 3000 3000 9000 6000 Disposible Income 1. In Figure 4, how much is…

A: Aggregate Demand: The aggregate demand is a sum of private investment demand, government…

Q: What are used to convince other governments to voluntarily limit their exports and are in effect…

A: The issue you raised has to do with trade policy and international trade. In particular, it…

Q: The diagram below shows two budget deficit functions for a hypothetical economy. Budget Deficit…

A: The structural budget deficit or surplus is a efficient approach to the stance of fiscal policy it…

Q: When firms use new and better ways of producing all goods and services, OA. the opportunity cost of…

A: The opportunity cost is defined as the give-up cost of an individual by choosing alternative options…

Q: (1) Write down each player’s best response functions and find all the Nash equilibria. (2) For each…

A: Game theory is a critical tool for economists in understanding and analyzing strategic interactions…

Q: 4(a) Distinguish between inter- industry and intra-industry international trade. (b) Outline the…

A: Inter-industry and intra-industry international trade are two concepts that describe different…

Q: Because perfectly competitive firms are price takers, a permanent increase in the market demand does…

A: A firm operating in a perfectly competitive market finds itself among numerous small sellers. The…

Q: Consider the demand curve for beer: Q= 120 -2P. If the supply curve for beer is P=12+Q and the…

A: Deadweight loss refers to the loss of economic efficiency that occurs when the equilibrium for a…

Q: factor 2 is $12, in what proportions should the firm use factors 1 and 2 if it wants to maximize…

A: Production function exhibits the relationship between the inputs and the output. Profit is the…

Q: Company x uses machines to manufacture x. One machine costs $142,000 and lasts about 5 years before…

A: The rate of return in economics illustrates the percentage gain or loss on an investment compared…

Q: Refer to the table and figure below: Option A Option B Option C Option D Option E Option F Output of…

A: Opportunity Cost: It refers to the foregone revenue on the next best alternative if we pick a…

Q: Refer to the graph above. The equilibrium level of GDP corresponds to: AP Real expenditures A. GDPO.…

A: Aggregate expenditure is the sum of consumption, investment, government spending and net export.…

Q: An increase in the number of skilled working-age immigrants and their families to the United States…

A: Labor alludes to the physical or mental exertion applied by individuals in the production of goods…

Q: offee grown in Guatemala is priced at 17 Guatemalan quetzal per pound (Guatemalan quetzal, or GTQ,…

A: The nominal exchange rate—the price of a dollar in the US, for instance—and the ratio of prices in…

Q: j. Can you verify that the post-merger total welfare strictly increases in the synergy level a? k.…

A: An oligopoly is a type of market structure in which a few larger companies control a large portion…

Q: Explain under what kind of conditions would you expect cyclical unemployment to be rising

A: Cyclical unemployment: Cyclical unemployment occurs during economic downturns when demand for labor…

Q: In a city where the equilibrium hourly wage for unskilled, entry-level workers is $11, the U.S.…

A: Price floor is the minimum price set by the government above the equilibrium price in the market to…

Q: Greg's Ice Cream produces 1160 gallons of ice cream per day. Each employee works one hour and has a…

A: Total output = 1160 gallons of ice creamTotal output = No. of hours each employee work * No. of…

Q: Suppose a change in exchange rates causes aggregate demand to decrease. What is the result? Choose…

A: The value of one currency in relation to another is shown by the exchange rate. This is the cost at…

Q: Specialization is deciding who can make decisions. True False

A: Specialization serves as a core economic principle that provides insight into the division of labor…

Q: Suppose you manufacture 10 million hard drives per year specifically for Dell laptop computers. If…

A: RSI = I - (Pm - C) * QWhere RSI = Relationship Specific InvestmentQ = 10 millionC=$20/unitI=$30…

Q: Which of the following statements about production and trade is FALSE? 1. If a country has an…

A: Absolute Advantage Theory Vs Comparative Advantage Theory:Absolute advantage compares the…

Q: Price A Du Multiple Choice Do BC Quantity Refer to the diagram, which shows demand and supply…

A: Demand curve is the downward sloping curve. The demand schedule is the tabular representation of…

Q: Quantity (cups/hour) The figure above refers to the market for coffee. What might cause shift from…

A: The link between the amount of a product provided and its price, while maintaining other variables…

Q: what is the relationship between the financial well-being of the industry and availability of…

A: Healthcare is a wide term that envelops a scope of services and practices pointed toward keeping up…

Q: Assume that the Vietnam places a strict quota on goods imported from Chile and that Chile does not…

A: Market Prices:The prices of products and services in a free market depend on the supply and demand…

Q: Suppose the amount of human and natural resources in an economy increase. Which one of the following…

A: GDP Deflator: The GDP deflator is a measure of the overall price level of an economy. It is used to…

Q: Suppose that when the price of good X increases from $500 to $660, the quantity demanded of good Y…

A: The elasticity of demand refers to the responsiveness of quantity demanded with respect to a change…

Q: Total reserves minus bank deposits with the Fed equals OA. excess reserves. OB. currency in…

A: Total Reserves: This includes all the currency that banks hold as reserves, which is the sum of both…

Q: True or False? A tax of $1 on buyers always decreases the equilibrium price by $1.

A: The only price at which consumer and producer desires coincide is equilibrium, or when the quantity…

Q: The New York Times newspaper cost $0.15 in 1970 and $0.75 in 2000. The average wage in…

A: The purchasing power of currency refsr to the quantity of items and services that can be purchased…

Q: Trucks impose many external costs on society: heavy air and noise pollution, traffic safety issues…

A: Negative externalities or external costs are the harmful side effects arise out of production or…

Q: The invention of money helped society get around the problem of ___________________________. A)…

A: It can be defined as a concept that shows how much currency of one nation is valuable in terms of…

Q: Which of the following is NOT an endogenous variable in the Romer model? The stock of knowledge The…

A: Paul M. Romer developed the Romer model, which is also known as the endogenous growth model. This…

Q: Complete the following table by indicating whether each point represents output combinations that…

A: Production possibilities frontier shows different combinations of two goods that can be produced…

Q: In general, foreign entities: a. are borrowers of domestic (U.S.) loanable funds.…

A: U.S. portfolio investments is bought by lenders due to the highly developed, liquid, and efficient…

Q: Situation 4: A machine was purchased at a price of $500,000 and was given a monthly installment of…

A: Price of the machine = 500,000This will considered as the present worth of machine .Monthly…

Question

2. In a competitive market, if the current price is below the equilibrium price, then
P
there is a surplus.
S
D
O there is no tendency for the price to change if from its current level.
there is a shortage.
none of the other options.
there is a tendency for the price to decrease from its current level.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Correct option

VIEW

Step 3: Analysing incorrect options

VIEW

Solution

VIEW

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

What is the relationship between quantity Demanded and quantity supplied at equilibrium? What is the relationship when there is a shortage? What is the relationship when them is a surplus?
Review Figure 3.4. Suppose the price of gasoline is 1.60 per gallon. Is the quantity demanded higher or lower than at the equilibrium price of 1.40 per gallon? What about the quantity supplied? Is there a shortage or a surplus in the market? If so, how much? Figure 3.4 Demand and Supply of Gasoline
How can you locate the equilibrium point on a demand and supply graph?
Review Figure 3.4 again. Suppose the price of gasoline is 1.00. Will the quantity demanded he lower or higher than at the equilibrium price of 1.40 per gallon? Will the quantity supplied be lower or higher? Is them a shortage or a surplus in the market? If so, of how much? Figure 3.4 Demand and Supply of Gasoline
If demand is inelastic, will shifts in supply have a larger effect on equilibrium price or on quantity?
If a 10 decrease in the price of one product that you buy causes an 8 increase in quantity demanded of that product, will another 10 decrease in the price cause another 3 increase (no more and no less) in quantity demanded?
How does one analyze a market where both demand and supply shift?
What does a downward-sloping demand curve mean about how buyers in a market will react to a higher price?
What determines the level of prices in a market?
Suppose the cross-price elasticity of apples with respect to the price of oranges is 0.4, and the price of oranges falls by 3. What will happen to the demand for apples?