If the price of a product is above equilibrium, what forces it down?
What will be an ideal response?
When the price is above equilibrium, a surplus occurs. Some producers who are unable to sell the product will have an incentive to offer to sell the product at a lower price. A lower price will simultaneously decrease the quantity supplied and increase the quantity demanded. This downward pressure on price continues until the surplus is eliminated and equilibrium is achieved.
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In which of the following industries would we expect collusion to be most effective?
a. retail gasoline, where most gas is sold by a large number of small dealers b. crude oil production, where most oil is sold by a small number of large sellers c. housing construction, an industry dominated by local firms that produce unique products d. soybean production, where there are large numbers of farmers in many countries
All of the following are possible criticisms of social regulation EXCEPT
A) that the costs may outweigh the benefits. B) that social regulation may create anticompetitive effects. C) that the regulations have not resulted in safer working conditions. D) that the regulations lead to higher production costs.