8.In microeconomics, the equilibrium price is defined as the price at which
Production costs are at a minimum.
The market clearing price where quantity demanded is equal to the quantity supplied and there are no shortages or surpluses.
Firms are able to sell most of the quantity they produce at that price.
Firms are selling at a profit and there is no surplus of goods unsold.
9. The market mechanism is the
Process by which firms and consumers bid at auctions.
System that governments use to announce price ceilings or price floors that they are imposing.
Exchange services firms use when they have surpluses of goods and services that they are unable to sell.
Tendency for price and quantity produced in the economy to adjust until the market clears and there are no shortages or surpluses.
10. When a surplus develops in a goods market as a result of a decline in demand, the market will tend to clear because
Demand will increase in response to the surplus of goods.
The sellers send the surplus back to the manufacturers for partial refund.
Supply decreases in response to the surplus of goods.
The price is allowed to fall, causing a decrease in the quantity supplied and an increase in quantity demanded, until the quantity demanded equals the quantity supplied.
11. When the quantity demanded is very sensitive to changes in price,
%ΔQ > %ΔP and demand is price elastic.
%ΔQ > %ΔP and demand is price inelastic.
The price elasticity is greater than 1 in magnitude and demand is price elastic.
Both a) and c).
12. Demand will tend to be more price elastic when
There are many close substitutes in the market for the good or service, the good or service is a luxury, and a long time period is under consideration.
There are few substitutes in the market for the good or service and a short time period is under consideration.
There are few substitutes for the good or service in the market, and the good or service is a necessity.
There are many close substitutes in the market for the good or service, the good or service is a necessity and a short time period is under consideration.