In this market, it can be concluded that at a price level of $100 per unit, there is <em>C. a shortage of 0.4 million units.</em>
- This market shortage occurs because 0.4 million units of the goods were not supplied. There is excess demand and shortage in supply.
- The market demand increased from the equilibrium quantity of 5 million units to 5.2 million while the market supply reduced from the equilibrium quantity of 5 million units to 4.8 million.
- The shortage of 0.4 million units results from the difference between the quantity demanded (5.2 million) and the quantity supplied (4.8 million) as a result of reduced price.
Thus, the market shortage shows the reduced willingness of suppliers to supply goods at the new price of $100 per unit instead of at the acceptable equilibrium price of $120 per unit.
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Answer:
a) Determine which type of cars will be sold at the efficient allocation.
All cars would be sold in a Pareto efficient allocation.
In a Pareto efficient market, resources are all allocated in the most efficient possible way. This is the reason why this is just a theoretical concept that does not necessarily apply in real life.
b) Determine which type of cars will be sold at the market equilibrium.
Since consumers are only willing to pay up to $1,620 for a used car, only medium quality and low quality cars will be sold. The price of high quality used cars is higher than the equilibrium price.
Explanation:
the most a buyer would be willing to pay for a used car is ($1,800 x 40%) + ($1,600 x 30%) + ($1,400 x 30%) = $720 + $480 + $420 = $1,620
Answer:
a. The discount rate is the
- interest rate at which banks can borrow reserves from the Federal Reserve.
The discount rate is the interest rate that the FED charges commercial banks, credit unions, or other financial institutions for lending them money.
b. If the Fed were to decrease the discount rate, banks will borrow
- more reserves, causing an increase in lending and the money supply.
Lowering the discount rate is considered part of an expansionary monetary policy since banks will borrow more money and lend more money to the public, increasing the money supply.
Answer: check
Explanation:
A <em>check</em> is drawn on a financial institution and is payable upon demand.
