Microeconomics
13th Edition
ISBN: 9781337617406
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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Students 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?
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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_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. 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_forwardif the price level of what firms produce is rising across an economy, but the costs of production are constant, then:arrow_forward
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