What is a market surplus, and how does the market attempt to resolve a surplus?
What will be an ideal response?
At a price higher than equilibrium, a surplus will occur. There will be pressure on sellers to lower prices to sell merchandise. For example, when a merchant must sell holiday gift wrap at a low price after the holiday, it means that the price was too high immediately after the holiday and this caused an after-holiday surplus. As the price falls, more consumers are willing to buy the item, and fewer sellers are willing to sell the item. The price keeps falling until quantity supplied equals quantity demanded.
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Some economists believe that the economy benefits from firms having market power. Which of the following is an argument that has been made to support this position?
A) Large firms are better able than small firms to spend funds on research and development required to develop new products. B) Research has shown that the deadweight loss from monopolies is a small percentage of the value of production in the United States. C) Competition is very rare in the U.S. economy and few new products are produced by smaller, competitive firms. D) Large firms can afford to lobby the U.S. government in order to impose restrictions on imports and reduce the outsourcing of jobs to other countries.
When comparing average wages for black and white men in the United States, wages paid to black men have been about 20 percent less than those paid to white men
a. True b. False Indicate whether the statement is true or false