Discuss the impact of demand and supply changes on market equilibrium price and quantity. Express this graphically.
What will be an ideal response?
An increase in demand will increase equilibrium price and quantity; and vice versa. An increase in supply will decrease equilibrium price and increase the equilibrium quantity; and vice versa. A simultaneous increase in demand and supply will assuredly increase the equilibrium quantity but the impact on equilibrium price is uncertain. A simultaneous increase in demand and decrease in supply will assuredly increase the equilibrium price but the impact on equilibrium quantity is uncertain.?
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Why do consumers benefit from pay-as-you-go social security?
A) It keeps inflation in check as money is redistributed. B) It is a better way than taxes to finance the government. C) It forces people to save more than they would otherwise. D) With sufficiently high population growth, many young contribute to the benefits of the old.
In which of the following situations is the absolute price elasticity of demand for an item most likely to exceed a value of 1?
A) when there are very few close substitutes for the item B) when there are very few producers of the item C) when the item's share of expenses in consumers' budgets is very small D) when there is considerable time to adjust to a change in the price of the item