Answered: 1. A market price that occurs below…

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Consumers, Producers, And The Efficiency Of Markets

Section: Chapter Questions

Problem 9PA

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1. A market price that occurs below equilibrium price will cause

A. a surplus of the good in the marketplace.

B. a greater quantity demanded than at market equilibrium.

C. will cause firms to supply additional units into the marketplace (relative to equilibrium price).

D. all of the above.

E. none of the above.

2. Here are three things that you could do if you do not attend your next-door neighbor's barbecue: watch television with some friends (you value this at $8), read a good novel (you value this at $4), or go in to work (you could earn $6 during the barbecue). The opportunity cost of going to your neighbor's barbecue is

A. $6, because this is the only alternative of the three where you actually receive a monetary payment.

B. $4, because this is the lowest dollar figure.

C. $8, because this is the highest valued alternative forfeited.

D. $18, because this is the total dollar sum of all the alternatives forfeited.

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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Market Equilibrium occurs when at market price, quantity demanded is equal to quantity supplied.

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