Market equilibrium refers to a situation in which market price
a. is high enough to allow firms to earn a fair profit.
b. is at a level where there is neither a shortage nor a surplus.
c. is low enough for consumers to buy all that they want.
d. is just above the intersection of the market supply and demand curves.
Ans: b. is at a level where there is neither a shortage nor a surplus.
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If K-12 education is determined to be an inframarginal positive externality, this means that K-12 education is being underproduced
a. True b. False
Refer to the above figure. Suppose the equilibrium moves from E' to point E. An event that could have caused this movement is
A) an increase in the real interest rate in the United States. B) an increase in U.S. productivity. C) an increase in the perceived stability of the U.S. economy. D) an increase in demand for Japanese-produced goods by U.S. residents.