Market price is the same thing as equilibrium price.
Answer the following statement true (T) or false (F)
False
Equilibrium price is the price at which quantity demanded is equal to quantity supplied. The market will tend toward equilibrium price but is not always at equilibrium.
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Which of the following is a linear demand function?
A. Qxd = ?0 + ?XPX2 + ?YPY2 + ?MM2 + ?MH2. B. Qxd = ?PX?X PY?Y M?M H?H. C. Qxd = ? + ?X log PX + ?Y log PY + ?M log M + ?M log H. D. Qxd = ?0 + ?XPX + ?YPY + ?MM + ?HH.
A monopoly produces widgets at a marginal cost of $10 per unit and zero fixed costs. It faces an inverse demand function given by P = 50 ? Q. Suppose fixed costs rise to $400. What happens in the market?
A. The firm will reduce its output and raise price. B. The firm continues to produce the same output and charge the same price. C. The firm will raise the price. D. The firm will shut down immediately.