Economics Chapter: Market Equilibrium

<p>A hypothetical force that promotes changes in price to reach equilibrium. (D)</p> Signup and view all the answers

<p>Prices tend to rise. (A)</p> Signup and view all the answers

<p>Excess demand (C)</p> Signup and view all the answers

<p>A market in equilibrium. (D)</p> Signup and view all the answers

<p>There is a tendency for prices to change. (A)</p> Signup and view all the answers

<p>Because firms hire less labor at higher wage rates. (D)</p> Signup and view all the answers

<p>40 (A)</p> Signup and view all the answers

<p>By summing the quantity of labor demanded by individual firms at various wage rates. (A)</p> Signup and view all the answers

<p>160 (C)</p> Signup and view all the answers

<p>The trade-off between income and leisure. (A)</p> Signup and view all the answers

<p>175 kg (D)</p> Signup and view all the answers

<p>Increased opportunity cost of leisure and an increase in purchasing power. (D)</p> Signup and view all the answers

<p>It considers itself a price taker with no influence over price. (B)</p> Signup and view all the answers

<p>30 kg (C)</p> Signup and view all the answers

<p>There is excess demand (B)</p> Signup and view all the answers

<p>Individuals tend to increase their supply of labor by working more hours. (C)</p> Signup and view all the answers

<p>ED(p) = 80 - 2p (C)</p> Signup and view all the answers

<p>The prevailing market wage rate. (B)</p> Signup and view all the answers

<p>Rs 40 (A)</p> Signup and view all the answers

<p>They may work more or less hours since both the income effect and the cost of leisure influence their decision. (D)</p> Signup and view all the answers

<p>Price must be less than 40 (D)</p> Signup and view all the answers

<p>Price decreases, quantity increases. (B)</p> Signup and view all the answers

<p>The equilibrium quantity will invariably decrease. (C)</p> Signup and view all the answers

<p>It will invariably increase. (C)</p> Signup and view all the answers

<p>The equilibrium price will invariably increase. (B)</p> Signup and view all the answers

<p>Equilibrium price decreases (D)</p> Signup and view all the answers

<p>Both supply and demand shift right. (D)</p> Signup and view all the answers

<p>Supply shifts left and demand shifts right. (D)</p> Signup and view all the answers

<p>Price decreases and quantity increases (B)</p> Signup and view all the answers

<p>A government-imposed lower limit on the price that can be charged for a good or service. (A)</p> Signup and view all the answers

<p>At a level higher than the market-determined price. (C)</p> Signup and view all the answers

<p>An excess supply of the commodity equal to $q_fq_f'$ (C)</p> Signup and view all the answers

<p>Where market demand equals market supply. (A)</p> Signup and view all the answers

<p>Purchase the surplus at the predetermined price. (B)</p> Signup and view all the answers

<p>To ensure the wage rate of labourers doesn't fall below a particular level. (B)</p> Signup and view all the answers

<p>There will be an excess supply in the market. (B)</p> Signup and view all the answers

<p>When the marginal revenue product of labour equals the wage rate (B)</p> Signup and view all the answers

<p>Equilibrium price increases; equilibrium quantity decreases. (B)</p> Signup and view all the answers

<p>The equilibrium price and quantity of X would both increase. (D)</p> Signup and view all the answers

<p>A larger effect on price and a smaller effect on quantity. (B)</p> Signup and view all the answers

<p>Quantity increases, price could increase, decrease, or remain unchanged. (A)</p> Signup and view all the answers

<p>The change in price is definite but the change in quantity is ambiguous. (D)</p> Signup and view all the answers

<p>The demand curve is always downward sloping in both markets, but the supply curve in the labour market can be backward bending. (C)</p> Signup and view all the answers

<p>Where the marginal cost of labor equals the marginal revenue product of labor. (B)</p> Signup and view all the answers

<p>$p = 50$ (B)</p> Signup and view all the answers

The price at which the quantity demanded and quantity supplied are equal, creating a balance in the market.

The amount of a good or service bought and sold at the equilibrium price.

A situation where the quantity supplied exceeds the quantity demanded at a given price. This leads to a surplus of goods.

A situation where the quantity demanded exceeds the quantity supplied at a given price. This leads to a shortage of goods.

The forces that drive a market towards equilibrium when there is an imbalance between supply and demand.

The tendency for prices to rise in response to excess demand.

The tendency for prices to fall in response to excess supply.

The state of a market where there is no excess supply or demand, indicating a stable price and quantity.

A mathematical equation that describes the relationship between the price of a good and the quantity demanded by consumers.

A mathematical equation that describes the relationship between the price of a good and the quantity supplied by producers.

The amount of the good that consumers are willing and able to buy at a given price.

The amount of the good that producers are willing and able to sell at a given price.

A government-imposed minimum price for a good or service, typically set above the market equilibrium price.

The point where the quantity demanded and quantity supplied of a good are equal, resulting in a stable market price and quantity.

Government programs designed to support agricultural prices by setting a minimum price for certain agricultural goods.

A legal minimum wage that employers must pay to workers. This minimum wage is typically set above the equilibrium wage rate.

The amount of a good producers are willing and able to sell at a given price.

The amount of a good consumers are willing and able to buy at a given price.

An increase in the number of firms supplying a good causes the supply curve to shift to the right.

When the supply curve shifts to the right, the equilibrium price of the good decreases, while the equilibrium quantity produced increases.

If both supply and demand curves shift simultaneously, the impact on equilibrium price and quantity depends on the direction and magnitude of the shifts.

When both supply and demand curves shift rightwards, the equilibrium quantity increases, but the equilibrium price may increase, decrease, or remain unchanged.

When both supply and demand curves shift leftwards, the equilibrium quantity decreases, but the equilibrium price may increase, decrease, or remain unchanged.

When the supply curve shifts leftward and the demand curve shifts rightward, the equilibrium price will increase, but the effect on equilibrium quantity is uncertain.

When the supply curve shifts rightward and the demand curve shifts leftward, the equilibrium price will decrease, but the effect on equilibrium quantity is uncertain.

The actual direction of price change when both supply and demand curves shift depends on the magnitude of the shift in each curve.

The relationship between the quantity of labor demanded and the wage rate. It is generally downward sloping, meaning that as the wage rate increases, the quantity of labor demanded decreases.

The point where the labor demand and labor supply curves intersect. It determines the equilibrium wage rate and the quantity of labor employed in the market.

The additional output produced by employing one more unit of labor. It is a key factor in determining a firm's demand for labor.

The additional revenue generated by employing one more unit of labor. In perfect competition, it equals the price of the product.

The trade-off individuals face between working for income and enjoying leisure. This choice influences how many hours they choose to work at different wage rates.

The relationship between the quantity of labor supplied and the wage rate. It is typically upward sloping, meaning that as the wage rate increases, the quantity of labor supplied also increases.

The effect of a wage increase on leisure due to the increased opportunity cost of not working. Higher wages make leisure more expensive, encouraging people to work more.

The effect of a wage increase on leisure due to increased purchasing power. Higher wages allow people to afford more leisure activities, potentially leading them to work less.

If the price of a substitute good (Y) for good X increases, consumers will buy more of good X. This will shift the demand curve for good X to the right, leading to a higher equilibrium price and quantity for good X.

When the price of an input used in the production of a commodity increases, the cost of production rises. This causes a leftward shift in the supply curve, leading to a higher equilibrium price and a lower equilibrium quantity of the commodity.

With a fixed number of firms, a shift in the demand curve has a larger impact on price and a smaller impact on quantity. This is because the supply is less flexible and cannot react as much to changes in demand.

When there is free entry and exit of firms, a shift in the demand curve has a smaller impact on price and a larger impact on quantity. New firms can enter the market to meet the increased demand, increasing supply and moderating the price increase.

When both demand and supply curves shift rightward, the equilibrium quantity increases. The effect on equilibrium price depends on the relative magnitudes of the shifts. If demand shifts more than supply, the equilibrium price will increase.

When both demand and supply curves shift in the same direction, the effect on equilibrium quantity is uncertain, while the effect on equilibrium price is certain. If both curves shift rightward, price will increase. If both curves shift leftward, price will decrease.

When demand and supply curves shift in opposite directions, the effect on equilibrium price is uncertain, while the effect on equilibrium quantity is certain. If demand shifts rightward and supply shifts leftward, price will increase. If demand shifts leftward and supply shifts rightward, price will decrease.

In the labor market, the supply curve is typically upward sloping, indicating that higher wages lead to a greater willingness to work. The demand curve for labor is downward sloping, indicating that firms will hire fewer workers as wages rise. In the goods market, supply and demand curves are typically upward and downward sloping, respectively.