Homework Clinic
Social Science Clinic => Economics => Topic started by: xclash on Jun 29, 2018
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In February, market analysts predict that the price of titanium will rise in March. What happens in the titanium market in February, holding everything else constant?
A) The quantity of titanium demanded and the quantity of titanium supplied both increase.
B) The supply curve shifts to the right.
C) The supply curve shifts to the left.
D) The demand curve shifts to the left.
Question 2
Will equilibrium in a market always result in an outcome that is economically efficient? Explain.
What will be an ideal response?
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Answer to Question 1
C
Answer to Question 2
An economically efficient outcome means that at the equilibrium price the marginal benefit of the last unit of output sold is equal to its marginal cost. This will occur only in markets that are competitive (many buyers and many sellers) and there are no price controls.