Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
expand_more
expand_more
format_list_bulleted
Question
Chapter 20, Problem 3RQ
To determine
Explain the law of one price.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
What is the Samuelson Rule? Why does the market outcome, based on the actions of rational, self-interested individuals will deviate from the results of the Samuelson Rule
When Adam Smith talked about “the invisible hand” he argued that:
High transaction costs normally prevent markets from achieving equilibrium.
Prices, in the long run, end up where both fairness and efficiency are achieved.
Changing prices leads to an “end” which buyers and sellers are not totally pleased with, but one that is efficient.
Create mutually agreed upon prices over time if the market is subsidized.
As prices increase, demand falls, but supply rises, creating an equilibrium outcome.
Self-interested activities help eliminate shortages and surpluses if price ceilings and price floors are effectively utilized.
What type of economists believe that markets naturally self-correct, and will reward good strategies and punish bad ones?
Chapter 20 Solutions
Macroeconomics (Fourth Edition)
Knowledge Booster
Similar questions
- When the cost of production decreases and all other factors remain the same, then if we have a market equilibrium the price of Equilibrium will decrease and the quantity of equilibrium will increase. Select one: True Falsearrow_forwardWhich of the following is true?arrow_forwardOften, wages and the prices of services cost more in cities than in rural areas. Is this a deviation from the law of one price?arrow_forward
- Since 2019, the price of lithium in China has been falling (and it is predicted to continue falling through 2020). Assume nothing else is happening (the only thing changing is the price). As the price falls, demand for lithium in China falls True or false?arrow_forwardWhat defines market equilibrium? How about market disequilibrium? What are the contrasting proposition regarding economic efficiency and equity?arrow_forwardIn your own words, why isn't the cost of producing a product sufficient to predict its market price?arrow_forward
- An alternative way of thinking about the forces that cause markets to equlibrate in the real world is to think of markets reallocating the good from low to high valued use. Or to think of how the action of buyers and sellers engaging in mutually beneficial voluntary exchange (market forces) reallocates legal ownership or the physical location of the good from low to high valued used. When a unit of a good is sold, that means the value the seller places on the good is lower than the value the buyer places on the good. After the sale has taken place, the ownership of the good has been transferred from a person who has a low value to a person with a high value. This is called a reallocation from low to high valued use. Sometimes this reallocation involves a physical movement of the good rather than a transfer of legal ownership. The good is transported from an area where the price of the good is low to an area where the price of the good is higher. This is also called a reallocation from…arrow_forwardAccording to the Italian economist Pareto, if I have 200 suppliers, how many suppliers can I expect will represent the majority of my spend?arrow_forwardAn alternative way of thinking about the forces that cause markets to equlibrate in the real world is to think of markets reallocating the good from low to high valued use. Or to think of how the action of buyers and sellers engaging in mutually beneficial voluntary exchange (market forces) reallocates legal ownership or the physical location of the good from low to high valued used. When a unit of a good is sold, that means the value the seller places on the good is lower than the value the buyer places on the good. After the sale has taken place, the ownership of the good has been transferred from a person who has a low value to a person with a high value. This is called a reallocation from low to high valued use. Sometimes this reallocation involves a physical movement of the good rather than a transfer of legal ownership. The good is transported from an area where the price of the good is low to an area where the price of the good is higher. This is also called a reallocation from…arrow_forward
- Hello. Could someone explain to me how demand and supply works in economicsarrow_forwardMaine has a very old housing stock, with many poorly insulated homes, but poor people often cannot afford to pay for home weatherization. In order to make weatherization more affordable, someone suggests capping insulation prices at 25% less than current values. Assuming that the market is competitive and functions as modeled by mainstream economic theory, which of the following is most likely to be true? select best answer from following ():The lower price for insulation will shift the demand curve for insulation. ():This policy will increase consumer surplus by more than it reduces producer surplus. ():This policy would benefit the poor, since they would be the most likely to buy the cheaper insulation ():With a lower price for insulation, firms will provide less, and fewer people will insulate their homes. ():With insulation more affordable, more people will insulate their homes.arrow_forwardSuppose the market for cars is unregulated. That is, car prices are free to adjust based on the forces of supply and demand. If a surplus exists in the car market, then the current price must be (higher OR lower) than the equilibrium price. For the market to reach equilibrium, you would expect (persistent excess supply OR buyers to offer higher prices OR sellers to offer lower prices) which would be the correct answer from the option?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning