Examlex

Solved

Suppose That Initially a Market Is in Equilibrium at a Price

question 330

Essay

Suppose that initially a market is in equilibrium at a price of $10 and a quantity of 5000 units per day. Several months later, the market is in a new equilibrium at a price of $5 and a quantity of 5000 units per day. What happened in the market?


Definitions:

Fallacy of Composition

The incorrect belief that what is true for the individual is necessarily true for the group as a whole.

Empirical Measure

A quantitative determination obtained through observation and experimentation rather than theory.

Variable

A measure that can change from time to time or from observation to observation.

Causality

Describes a relationship where one event (the cause) directly affects the outcome of another event (the effect).

Related Questions