In a Free-Market System,a Disequilibrium in One Market

question 61

Multiple Choice

In a free-market system,a disequilibrium in one market

• A)provides evidence that the market system does not work.
• B)shows that government intervention is always necessary to restore the market to equilibrium.
• C)suggests that no seller or buyer has an incentive to alter his or her behaviour.
• D)produces forces that eventually bring that market back to equilibrium.
• E)means that the economy will fall into chaos.

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Definitions:

Consumers

Individuals or groups that purchase or use goods and services generated within the economy.

Retailers

Businesses or individuals engaged in the selling of goods or merchandise directly to consumers, typically in small quantities.

Cyclical Unemployment

The increase in unemployment that occurs during recessions and downturns in the economic cycle, typically resulting from a decreased demand for goods and services.

Structural Unemployment

Unemployment caused by a mismatch between the skills or location of workers and the requirements of the job market.