Why does equilibrium in a market tend to be stable? Select one: O a. It doesn't. Observed stability is largely the result of custom, but markets are inherently chaotic. O b. Almost all markets are de facto monopolies. Monopolists rarely change prices so as not to alert consumers to the possibility of buying goods more cheaply. O c. Government regulations ensure that prices can only change slowly, so that an equilibrium price appears stable in the short run. O d. When the price deviates from the equilibrium price, surpluses or shortages occur. As market participants act to be better off, they drive the market back to equilibrium.

Why does equilibrium in a market tend to be stable? Select one: O a. It doesn't. Observed stability is largely the result of custom, but markets are inherently chaotic. O b. Almost all markets are de facto monopolies. Monopolists rarely change prices so as not to alert consumers to the possibility of buying goods more cheaply. O c. Government regulations ensure that prices can only change slowly, so that an equilibrium price appears stable in the short run. O d. When the price deviates from the equilibrium price, surpluses or shortages occur. As market participants act to be better off, they drive the market back to equilibrium.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Are markets always in equilibrium? Select one: O a. Uncertain, economic theory has no answer to this question. O b. No, they never "settle down" into a stable price and quantity. O c. Yes, they are always at the equilibrium point, or very close to it. O d. No, but if there is no interference, they tend to move toward equilibrium. O e. Yes, because few things tend to alter supply and demand.
What happens when there are changes to production other than price or STONER Choose all that apply A)Change supply B)Dont change supply C)Change quantity supply D)Shift supply
Price Quantity Supplied supply curve A Supply Curve A $1.00 500 supply curve B $2.00 600 Supply Curve B $1.00 600 $3.00 900 When we apply the midpoint method, which of the three supply curves represents the most elastic supply? O supply curve C There is no difference in the elasticity of the three supply curves. Supply Curve C $2.00 400 $5.00 700
Price ($) OA. left; shift upward in the right panel O B. right; remain unchanged in both panels O C. right; shift upward in the right panel O D. right; remain unchanged in the right panel only O E. left; remain unchanged in both panels Quantity D Price ($) Quantity _d₁ Consider the figures above. The left panel shows the industry supply and demand lines. The right panel shows an individual firm's demand line. If there is an increase in the cost of the productive inputs used in this industry, the industry supply line will shift to the demand line will in the left panel, and the
2. Consider a market where demand is described by QD = 140 – 6P. An individual firm in this market can supply quantity qs = P – 2 in the short run, for any price above 2. (Quantities are in thousands of units per year, prices are in US dollars per unit.)
This question is inspired on the recent evolution of electricity markets in Switzerland and the EU.Suppose a market consists of three producers:i. Firm 1 (photovoltaics) has a marginal cost of production od CHF 1 and can produce up to 100 MW/h;ii. Firm 2 (hydroelectric) has a marginal cost od production of CHF 5 and can produce up to 200 MW/H;iii. Firm 3 (gas) has a marginal cost od production of CHF 20 and can produce up to 200 MW/h.For simplicity, assume that there are no fixed costs of production.Consumers are willing to pay a constant amount of 25 CHF for each additional MW/h up to 500 MW/h. a) Draw a graph of supply and demand for this market.b) Calculate the price in the market and the profits of each company.
A market's deadweight loss is calculated as: O the economic loss that a firm has when it is not producing its profit-maximizing output. O the price at equilibrium minus the price at actual quantity. the total economic surplus at the efficient quantity minus the total economic surplus at the actual quantity. the loss to consumers when a product malfunctions or fails to meet expectations.
FoisPas, a French restaurant in Westwood, has decided to increase the price of its Sunday brunch from $30 to $34. Following this price increase, the number of reservations on a typical Sunday dropped from 60 to 55. Which statement is correct? O FoisPas was initially maximizing revenues, as demand was unit-elastic at the initial price O The total costs faced of FoisPas on a typical Sunday must have increased for sure O The price increase led to a decrease in total revenues as demand was elastic at the initial price O FoisPas faces a horizontal demand curve O The price increase had a positive impact on total revenue as demand was inelastic at the initial price
Consider the following graph: Producer surplus is: O A. revenue plus variable cost. O B. revenue minus variable cost. OC. the area below the market price up to the amount produced. D. the area above the supply curve up to the amount produced. 10- 9- 8- 7- 6- P 4- 3- 2- 1- 0- 0 Price Quantity S = MC 10 Q
Consider the markets for BP supreme-grade gasoline, all BP grades of gasoline, and all gasoline. For which of these three markets will demand be most elastic? Demand will be most elastic for O A. all gasoline, then for BP supreme-grade gasoline, and then for all BP grades of gasoline. O B. all BP grades of gasoline, then for BP supreme-grade gasoline, and then for all gasoline. OC. all gasoline, then for all BP grades of gasoline, and then for BP supreme-grade gasoline. O D. BP supreme-grade gasoline, then for all BP grades of gasoline, and then for all gasoline. O E. BP supreme-grade gasoline, then for all gasoline, and then for all BP grades of gasoline.
True or False: When any firm charges a higher price, fewer of its goods are sold. a. True b. False