Adam Smith's invisible hand theory is the concept that in a market where people are free to buy and sell as they please, buyers will buy goods that sellers offer at prices that work for all parties.
The equilibrium price is the only price where the desires of consumers and the desires of producers agree—that is, where the amount of the product that consumers want to buy (quantity demanded) is equal to the amount producers want to sell (quantity supplied).
When two lines on a diagram cross, this intersection usually means something. On a graph, the point where the supply curve (S) and the demand curve (D) intersect is the equilibrium.
What Is a Demand Schedule?
In economics, a demand schedule is a table that shows the quantity demanded of a good or service at different price levels. A demand schedule can be graphed as a continuous demand curve on a chart where the Y-axis represents price and the X-axis represents quantity.
An example from the market for gasoline can be shown in the form of a table or a graph. A table that shows the quantity demanded at each price, such as Table 1, is called a demand schedule.
Price (per gallon) Quantity Demanded (millions of gallons)
$1.00 800
$1.20 700
$1.40 600
$1.60 550
$1.80 500
$2.00 460
$2.20 420
Table 1. Price and Quantity Demanded of Gasoline
Supply schedule
again using the market for gasoline as an example. Like demand, supply can be illustrated using a table or a graph. A supply schedule is a table, like Table 2, that shows the quantity supplied at a range of different prices. Again, price is measured in dollars per gallon of gasoline and quantity supplied is measured in millions of gallons.
Price (per gallon) Quantity Supplied (millions of gallons)
$1.00 500
$1.20 550
$1.40 600
$1.60 640
$1.80 680
$2.00 700
$2.20 720
Table 2. Price and Supply of Gasoline
Equilibrium price
gallon) Quantity demanded (millions of gallons) Quantity supplied (millions of gallons)
$1.00 800 500
$1.20 700 550
$1.40 600 600
$1.60 550 640
$1.80 500 680
$2.00 460 700
$2.20 420 720
Table 3. Price, Quantity Demanded, and Quantity Supplied
Because the graphs for demand and supply curves both have price on the vertical axis and quantity on the horizontal axis, the demand curve and supply curve for a particular good or service can appear on the same graph. Together, demand and supply determine the price and the quantity that will be bought and sold in a market.
The equilibrium price is the only price where the plans of consumers and the plans of producers agree—that is, where the amount of the product consumers want to buy (quantity demanded) is equal to the amount producers want to sell (quantity supplied). This common quantity is called the equilibrium quantity. At any other price, the quantity demanded does not equal the quantity supplied, so the market is not in equilibrium at that price.
In Figure 3, the equilibrium price is $1.40 per gallon of gasoline and the equilibrium quantity is 600 million gallons. If you had only the demand and supply schedules, and not the graph, you could find the equilibrium by looking for the price level on the tables where the quantity demanded and the quantity supplied are equal.
The word “equilibrium” means “balance.” If a market is at its equilibrium price and quantity, then it has no reason to move away from that point. However, if a market is not at equilibrium, then economic pressures arise to move the market toward the equilibrium price and the equilibrium quantity.
Imagine, for example, that the price of a gallon of gasoline was above the equilibrium price—that is, instead of $1.40 per gallon, the price is $1.80 per gallon. This above-equilibrium price is illustrated by the dashed horizontal line at the price of $1.80 in Figure 3. At this higher price, the quantity demanded drops from 600 to 500. This decline in quantity reflects how consumers react to the higher price by finding ways to use less gasoline.
Moreover, at this higher price of $1.80, the quantity of gasoline supplied rises from the 600 to 680, as the higher price makes it more profitable for gasoline producers to expand their output. Now, consider how quantity demanded and quantity supplied are related at this above-equilibrium price. Quantity demanded has fallen to 500 gallons, while quantity supplied has risen to 680 gallons. In fact, at any above-equilibrium price, the quantity supplied exceeds the quantity demanded.
The supply of loanable funds is $50 billion. Thus, option c is correct.
The supply of loanable funds considers only national savings( public savings + private savings), thus the supply of funds shall be only $50 billion. The national savings is the rate that measures the amount of income that households, business, and the government saves. It looks at the difference between a nation's income and consumption.
The national savings rate is the GDP that is saved rather than spent in the economy. It is an indicator of a nation's health as it shows the trends in savings.
Hence, option c is correct, that is $50 billion.
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The audit expectation gap is caused by unrealistic user expectations. The auditors provides reasonable gap examples that would not be included in unrealistic user expectations.
NASBA believes the expectancy gap relating to fraud and going problems in a financial statement audit may be caused by a few factors: lack of knowledge by way of the general public as to what an audit is and what auditors do; inconsistent audit execution in these regions by some auditors due to lack of expertise.
The expectation hole exists while auditors and the public keep distinct beliefs about the auditors' obligations and obligations and the messages conveyed by way of audit reports. apparently, there's an opening between what the public expects and what it virtually receives.
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