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Chapter 3: Q 38. (page 79)

Explain why the following statement is false: “In

the goods market, no seller would be willing to sell for less than the equilibrium price.”

Short Answer

Expert verified

This statement “In the goods market, no seller would be willing to sell for less than the equilibrium price.” is false because there are many suppliers who sell the product below equilibrium prices because of various reasons.

Step by step solution

01

Step 1. Goods market and equilibrium price.

By Goods Market, we mean all the buying and selling of goods and services.

The equilibrium price is where the supply of goods matches demand. normally in the goods, market equilibrium price and quantity are determined by the crossing or intersection of demand and supply.

02

Step 2.

Some suppliers are willing to sell their goods even at the lower prices and there are various reasons such as perishable goods which cannot be stored for long.

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Most popular questions from this chapter

Suppose both of these events took place at the same time. Combine your analyses of the impacts of the iPod and the tariff reduction to determine the likely impact on the equilibrium price and quantity of Sony Walkman-type products. Show your answer graphically.

Let’s think about the market for air travel. From August 2014 to January 2015, the price of jet fuel increased

roughly 47%. Using the four-step analysis, how do you think this fuel price increase affected the equilibrium price

and quantity of air travel?

What causes a movement along the demand curve?

What causes a movement along the supply curve?

Why would a free market never operate at a quantity greater than the equilibrium quantity?

What is the difference between the supply and

the quantity supplied of a product, say milk? Explain

in words and show the difference on a graph with the

supply curve for milk.
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