Author Question: Markets tend toward equilibrium and, as a result, will tend to eliminate shortages and surpluses. ... (Read 100 times)

PhilipSeeMore · **on:** Jun 30, 2018

Markets tend toward equilibrium and, as a result, will tend to eliminate shortages and surpluses. Why?

Question 2

If government purchases exceed tax revenue, there is a budget deficit.
a. True
b. False
Indicate whether the statement is true or false

Viet Thy · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

Markets tend toward equilibrium because when a shortage exists, consumers who are unhappy about not being able to purchase the products or services they want will tend to bid the prices higher, moving the market toward equilibrium. If a surplus exists, suppliers are unhappy about not being able to sell the quantity of goods or services they wish, and will tend to lower prices in order to persuade consumers to purchase more goods and services.

Answer to Question 2

True