Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 4, Problem 7QP
To determine
The fewer exchange rates under disequilibrium price.
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Check out a sample textbook solutionStudents have asked these similar questions
(a) In Figure A, Supply and Demand do not make a market because the market is not at equilibrium.
(b) In Figure A, Supply and Demand do not make a market because they do not have any prices in common so that exchange will not happen.
(c) In Figure B, Supply and Demand make do a market.
(d) Both (b) and (c) are true.
(e) All the above are true.
(f) None of the above.
20. In the graph above, point E represents the autarkic equilibrium of a country in an endowment model. Both black and red curves are indifferences curves of consumers with identical homoethic preferences. If this country opens up to trade and world prices are given by the slope of the red line, then
Question 20 options:
a)
this country will import clothing and export food
b)
this country will export clothing and import food
c)
there is no trade in the new equilibrium
d)
this counry will import and export clothing
At prices below equilibrium, the quantity exchanged is equal to the quantity supplied. True, false, or uncertain?
Chapter 4 Solutions
Economics (MindTap Course List)
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Similar questions
Explain, with the aid of a graph, market equilibrium and disequilibrium.
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Assume the equilibrium price in a free market for an office table is R320,00. If the price of the table moves up to R400,00, explain how the market for this piece of furniture moves from disequilibrium to equilibrium.
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If no trade occurs between the markets, what are the equilibrium values of D1, S1, P1, D2, S2, and P2? Solve algebraically
question number 1 that is pictured
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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_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…
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if the price level of what firms produce is rising across an economy, but the costs of production are constant, then:
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In the basic supply-and-demand model, a buyer only purchases a good when?
if the price is lower than it was previously.
if the price of the good covers the producers’ costs of production.
if the price is less than they are willing to pay.
if doing so increases the well-being of society.
if they are forced to do so.
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Some have argued that higher cigarette prices do not deter smoking. While there are many arguments both for and against this view, some find the following argument to be the most persuasive of all: “The laws of supply and demand indicate that higher prices are ineffective in reducing smoking. In particular, higher cigarette prices will reduce the demand for cigarettes. This reduction in demand will push the equilibrium price back down to its original level. Since the equilibrium price will remain unchanged, smokers will consume the same number of cigarettes.”Do you agree or disagree with this view?
Disagree - the reduction in demand will push the equilibrium price below its original level.
Disagree - this confuses a change in demand with a change in quantity demanded.
Agree - the price increase will ultimately leave cigarette consumption unchanged.
Disagree - higher cigarette prices will actually increase the demand for cigarettes.
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Some have argued that higher cigarette prices do not deter smoking. While there are many arguments both for and against this view, some find the following argument to be the most persuasive of all: “The laws of supply and demand indicate that higher prices are ineffective in reducing smoking. In particular, higher cigarette prices will reduce the demand for cigarettes. This reduction in demand will push the equilibrium price back down to its original level. Since the equilibrium price will remain unchanged, smokers will consume the same number of cigarettes.”
Do you agree or disagree with this view?
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For a two-person two goods exchange economy, provide a formal definition of a barter equilibrium and formally demonstrate that such allocations are in the core of the economy.
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In this problem, we want to think about the difficulties that governments face in agreeing to significantly reduce CO2 emissions in order to control climate change.
In the context of climate change, what phenomenon does China’s utility function capture? What does this exercise tell us about the limitations of the first welfare theorem? What do you think is an important aspect of trade in reality which is not captured by this model?
Provide detailed analysis
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Dear tutor, please solve these True/False Questions. Thank You!
1. Any point on the contract curve is Pareto efficient regardless of the initial endowment.
2. When two people trade their initial endowments to a point on the contract curve, only the level of the endowments will determine the new allocation.
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