A product market is in equilibrium:
A. when there is no shortage of the product.
B. when there is no surplus of the product.
C. when consumers want to buy more of the product than producers offer for sale.
D. where the demand and supply curves intersect.
Answer: D
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If policymakers use a pollution tax to control pollution, the tax per unit of pollution should be set
A) equal to the marginal private cost of production at the economically efficient level of pollution. B) equal to the amount of the deadweight loss created in the absence of a pollution tax. C) at a level low enough so that producers can pass along a portion of the additional cost onto consumers without significantly reducing demand for the product. D) equal to the marginal external cost at the economically efficient level of pollution.
If a monopolistically competitive firms incurs an increase in fixed costs, its price will rise and its output will fall
a. True b. False Indicate whether the statement is true or false