Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 6, Problem 3QR
To determine
The mechanisms that allocate resources when price is not allowed to bring the demand and supply into equilibrium.
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What mechanisms allocate resources when the price of a good is not allowed to bring supply and demand into equilibrium?
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Chapter 6 Solutions
Principles of Microeconomics (MindTap Course List)
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- If people can't afford the equilibrium price for a good, would it be a good idea for the government to force the producer to produce it and give it to the poor people? Why or why not?arrow_forwardHow do prices communicate to economic actors?arrow_forwardWhen the price is above the equilibrium, how do market forces move the market price to equilibrium. When price is above the equilibrium, there will be more sellers than buyers and the surplus goods will start to pile up. The only way for sellers to get rid of their excess goods is to raise prices. When price is above the equilibrium, there will be more sellers than buyers and the surplus goods will start to pile up. The only way for sellers to get rid of their excess goods is to lower prices. The government directs companies to lower their price to clear unused inventory When price is above the equilibrium, there will be more buyers than sellers and the surplus goods will start to pile up. The only way for sellers to get rid of their excess goods is to maintain their prices and wait.arrow_forward
- The real world is dynamics. If so, why do agricultural economics continue to rely so heavily on comparative static?arrow_forwardAn increase in the population of a country will cause the demand curve to shift outward and supply to increase. true or falsearrow_forwardWhen does inefficiency exist in an economy? when a good is distributed fairly among buyers when a good is not distributed fairly among buyers when a good is not being produced by the lowest-cost producers when a good is being consumed by buyers who value it most highlyarrow_forward
- TRUE OR FALSE? The scarcity of raw materials will result in the shift of the supply curve upward to the left.arrow_forwardSuppose you are asked to do a market analysis in an area in which a natural disaster has recently occurred. (An example might be Nashville after the spring floods or New Orleans after Hurricane Katrina.) Other than building supplies (which is too easy :), choose a market for a good or service that will be affected. Will demand or supply be affected? (Even if it might be both, just choose one or the other to keep it simpler). What happens to equilibrium prices and output in this market? Draw a supply and demand graph for your own use, and then explain the process in detail. Choose a market that has not already been chosen by a classmate. Be creative and thoughtful!arrow_forwardThe supply curve of some good is vertical. What will be the effects of a fall in demand for it? explain When two people exchange a good for money, we know that they both benefit. If so, why are economists generally uninterested in which of these people receives more of the gains from the exchange? explainarrow_forward
- Why is the law of demand and the law of supply a useful economic model?arrow_forwardIn a market economy, what mechanism determines the price and quantity of goods. sold? A) Government Regulations B) Supply and Demand C) Corporate Decision-Making D) International Trade Agreementsarrow_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. Consider the demand at a price of $9. Look at the image below. multiple answers may be correct.arrow_forward
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