Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Stable and Unstable Equilibrium
An equilibrium is said to be stable equilibrium when economic forces tend to push the market towards it. In other words, any divergence from the equilibrium position sets up forces, which tend to restore the equilibrium. This is the case in the market for good X illustrated.
At prices above Ope, there is an excess supply which pushes the price down. At prices below Ope there is an excess demand which pushes the price up.
Unstable equilibrium on the other hand is one such that any divergence from the equilibrium sets up forces which push the price further away from the equilibrium price. Consider the figure below which illustrates the market for good Y, which has a demand curve sloping upwards from left to right. Good Y might be an inferior good or a veblen good.
Price Ope is the equilibrium price and quantity Oqe is the equilibrium quantity. The "abnormal" demand curve means that at prices above Ope there is excess demand which pushes the price upwards and away from the equilibrium. Similarly, at prices below Ope, there is excess supply which pushes the prices even further down.
Thus, although equilibrium are states of rest at which no economic forces exist to change the situation, it is important to remember that not all equilibria are stable. The equilibrium in the figure above is sometimes called a knife edge equilibrium because a small change in price sends the system well away from equilibrium.
Average Total Costs (ATC) This is total cost per unit of output, obtained by dividing total cost by total output i.e. ATC = Total Cost Total Outp
Special Drawing Rights (SDR) These are international reserve currencies created by the International Monetary Fund (IMF) to overcome the problems of using gold and national c
Factors influencing the supply of a commodity a) Own Price of the commodity There is a direct relationship between quantity supplied and the price so that the hig
A baseball team is trying to predict ticket sales for the upcoming season. They are also considering increasing prices. The market has a population of 2 million persons. The team s
Gold Although currently no country uses gold as its national currency, gold has a long history of use as commodity money and has almost universal acceptability. Gold is still
The individual and market demand curves The quantities and prices in the demand schedule can be plotted on a graph. Such a graph after the individual demand schedule is called
neoclassical thinking assumes that all firms are established to make profit has been challenged by managerial discretion model.How successful have been these models to maximize pro
Supply and Demand Discuss and analyze following statement: The Wall Street Journal reported that recent law school graduates were having a very difficult time obtaining jo
I was given a few spreadsheets and asked to do an income, balance and cash flow statement. It''s a lot of info and I have no idea what I''m doing
Q. What is Monopoly? The term 'Monopoly' has been derivative of Greek term 'Monopolies' that means a single seller. So, monopoly is a market condition in that there is a single
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd