Assume a Market Is in Equilibrium

question 98

Multiple Choice

Assume a market is in equilibrium. There is an increase in supply, but no change in demand As a result the equilibrium price ________, and the equilibrium quantity ________.

• A) rises; increases
• B) falls; decreases
• C) falls; increases
• D) rises; decreases
• E) rises; does not change

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Definitions:

Equilibrium Wage

The wage rate at which the quantity of labor employers are willing to hire equals the quantity workers are willing to supply, with no excess demand or supply.

Quantity Of Labor

The total number of labor hours provided by workers for the production of goods or services.

Labor

Human effort, both physical and mental, used in the production of goods and services.

Efficiency Wage

A higher-than-market wage that a firm pays to increase worker productivity.