0
Equilibrium price and quantity will remain the same as long as?
Wiki User
∙ 14y ago
there is no demand and supply
Wiki User
∙ 14y ago
Add your answer:
Earn +20 pts
What is the market equilibrium?
Market equilibrium comes at the price of a commodity for balancing the market forces like demand & supply.In market equilibrium the amount that the buyers want to buy equal to the amount that the sellers want to sell.The reason we call this equilibrium,when the forces of demand & supply are in balance, there is no reason for a price to rise or fall as long as other factors remain unchanged.At equilibrium, quantity demanded equals quantity supplied.
True False If the market for Rolex watches is in equilibrium the quantity of Rolex watches demanded will equal the quantity of Rolex watches supplied?
True. As long as it is quantity demanded and not demand overall.
In long run equilibrium a purely competitive firm will operate where price is?
nn
Can you explain why there is no pressure for the equilibrium price to change?
The equilibrium price exists when at that price supply and demand for a product are equal. Apparently at that price level everybody is happy and as long as nothing changes there will be no pressure. If it would arise because of an increase in eithersupply or demand, the price would no longer be an equilibrium price and it would shift to another - higher or lower - level.
What happens when market price is above equilibrium price?
When the market price of a good or service rises above equilibrium on its own, the number of buyers exhibiting demand for it is reduced. The only thing left for the maker of such a good or service to do is to drop the price to restore the level of demand necessary to make an optimal profit. This sounds contrary to simple arithmetic, but the fact is that the equilibrium is the price at which consumers get the best deal and suppliers earn the most profit. The effect of price controls is a common example of when a price is held artificially above equilibrium price. Equilibrium is established in a free market where the quantity of a good or service supplied is equal to the quantity demanded. So when government steps in and imposes a price floor on a good or service (such as milk or even labor i.e. minimum wage), everything is fine unless the forces of supply and demand cause the equilibrium to fall beneath that price floor. In the case of labor, minimum wage can cause a labor surplus (commonly and fallaciously referred to as a job shortage). Essentially the price of labor is held artificially high so employers are forced to seek alternatives such as hiring fewer people to do the same job. If the price of milk is set above equilibrium by legislation (perhaps as an earmark to support small agriculture) then the natural effect is for there to be a surplus. Long story short, a lot of milk spoils on the shelves at the grocery store.
What is the market equilibrium?
Market equilibrium comes at the price of a commodity for balancing the market forces like demand & supply.In market equilibrium the amount that the buyers want to buy equal to the amount that the sellers want to sell.The reason we call this equilibrium,when the forces of demand & supply are in balance, there is no reason for a price to rise or fall as long as other factors remain unchanged.At equilibrium, quantity demanded equals quantity supplied.
True False If the market for Rolex watches is in equilibrium the quantity of Rolex watches demanded will equal the quantity of Rolex watches supplied?
True. As long as it is quantity demanded and not demand overall.
In long run equilibrium a purely competitive firm will operate where price is?
nn
Can you explain why there is no pressure for the equilibrium price to change?
The equilibrium price exists when at that price supply and demand for a product are equal. Apparently at that price level everybody is happy and as long as nothing changes there will be no pressure. If it would arise because of an increase in eithersupply or demand, the price would no longer be an equilibrium price and it would shift to another - higher or lower - level.
What happens when market price is above equilibrium price?
When the market price of a good or service rises above equilibrium on its own, the number of buyers exhibiting demand for it is reduced. The only thing left for the maker of such a good or service to do is to drop the price to restore the level of demand necessary to make an optimal profit. This sounds contrary to simple arithmetic, but the fact is that the equilibrium is the price at which consumers get the best deal and suppliers earn the most profit. The effect of price controls is a common example of when a price is held artificially above equilibrium price. Equilibrium is established in a free market where the quantity of a good or service supplied is equal to the quantity demanded. So when government steps in and imposes a price floor on a good or service (such as milk or even labor i.e. minimum wage), everything is fine unless the forces of supply and demand cause the equilibrium to fall beneath that price floor. In the case of labor, minimum wage can cause a labor surplus (commonly and fallaciously referred to as a job shortage). Essentially the price of labor is held artificially high so employers are forced to seek alternatives such as hiring fewer people to do the same job. If the price of milk is set above equilibrium by legislation (perhaps as an earmark to support small agriculture) then the natural effect is for there to be a surplus. Long story short, a lot of milk spoils on the shelves at the grocery store.
What will happen to the equilibrim price level and real GDP if aggregate demand and aggregate supply both increase?
If aggregate demand increases at every price level than the demand curve shifts to the right. In the short-run the new equilibrium forms from an increase in willingness to spend, thus higher prices and higher real GDP or quantity of output. If short-run aggregate supply increases at every price level than the supply curve shifts to the right. From the short-run to the long-run the new equilibrium forms from an increase willingness to sell, thus prices reduce to original equilibrium and output increases further. Recap: Prices stay constant while real GDP or total quantity of output increases.
What is quasi-equilibrium?
In equilibrium, after any displacement from equilibrium, the system will always seek to return to the same state. In quasi-equilibrium, a disturbance of the system may result in the system shifting to a new, more stable equilibrium state. An example of quasi equilibrium is a supersaturated liquid with no nucleation sites for the growth of crystals. It may remain in the same quasi-equilibrium state indefinitely as long as no nucleation sites are introduced. As soon as some seed crystals are introduced however, the solute in the supersaturated solution will begin to crystalize out of the soultion until enough is removed to reduce the solution to true equilibrium. At that point, no mater what additional crystals are added or removed from the solution, the concentration of the solute will remain the same.
Definition of equilibrium income?
This is established where aggregate quantity supplied is equal to aggregate quantity demanded. It is the central tendency of real income that equates the plans of consumers with those of producers. It is a stable level of income, so long as the various factors in the model DO NOT change.
What can you say about supply and demand relationship?
They are largely unrelated unless one includes price into the equation. In the long run, it would be plausible to suggest that as demand rises, supply will rise because producers will see an opportunity for profit (this would really only occur outside of equilibrium and is the process that returns a market to the equilibrium point). It would be simplistic to say that as demand rises so does supply (although this is true) because both are more of a function of price and quantity demanded/supplied than of each other.
Explain the process that drives the economic profit to zero in the long run for a perfectly competitive firm?
In perfectly competitive markets, economic profits are zero in the long run because firms are able to enter and exit the market. If firms in a perfectly competitive market are profitable, there would be an incentive for new firms to enter. Supply would increase, causing an increase in quantity and the price to be driven back down to equilibrium: NO PROFIT! If firms in a perfectly competitive market are suffering a loss, some firms would choose to exit the market. Supply would decrease, causing a decrease in quantity and the price to be driven back up to equilibrium: NO PROFIT!
Perfectly competitive firm in long run equilibrium?
what about them? profits are 0 price=marginal cost all costs are variable optimal allocation of inputs is where marginal rate of technical substitution is equal to the price ratio of the inputs.
Pattern of evolution where a species is stable for a long time then rapidly changes?
punctuated equilibrium
