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Assignment 2 - the quantity demanded increases and when the...

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Spencer Lane 10966400 Prof. Cassey Econ 101-1 Homework # 2 1a. Competitive equilibrium is a situation where the quantity demanded equals the quantity supplied in a market equilibrium with many buyers and sellers. It is relative to economics because a market that is not in equilibrium than it will move toward equilibrium. Once a market is in equilibrium, it stays there. It is also relevant because if the quantity supplied is not equal to the quantity demanded than there will be a surplus of goods. This results in firms having an excess of goods and having to lower the prices as a result of this in order to increase quantity demanded. 3b. The Law of Demand holds for both Benny and April because as the price of the product falls
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Unformatted text preview: the quantity demanded increases and when the price of the product rises the quantity demanded will decrease. 3d. Yes the law of demand holds for the market because if all individuals follow the law of demand than the market demand will follow the law of demand and it is evident in the graph that it does. 4e. The first scenario exhibits greater Allocative efficiency. The second scenario doesn’t allow for you to maximize all of what could be sold. The first scenario allows for the greatest advantages. On this assignment I worked with Scott Krauter and received help from Matt Good a member of my fraternity. I apologize for the dark blue ink my 0printer ran out of ink at the last second....
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