Answered: 3. The market equilibrium is said to…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. The market equilibrium is said to achieve allocative efficiency. What does this statement mean? Explain using a graph. Indicate the following on the graph: Consumer and producer surplus, market price, and quantity bought and sold. When a tax is introduced, explain how the market changes. In another graph indicate the Consumer and producer surpluses, tax revenue, and deadweight loss from taxation

Definition Video Formula Definition Phenomenon in which market supply and demand balance each other. Market equilibrium is the economic state in which the market demand curve intersects the market supply curve, giving us the equilibrium price and equilibrium quantity for which a commodity can be sold and purchased in an economy. When market equilibrium is achieved, it suggests that all resources have been allocated efficiently and that there is just a distribution of income and resources in the economy. Video Formula

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