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.
DIGRESSIVE TAX A tax is called digressive when the higher incomes do not make a due contribution or when the burden imposed on them is relatively less. Another way in which
According to J.B. Clark's profits arises in a dynamic economy, not in a static one. A static economy is one in which there is absolute freedom of competition population and capital
Merits of direct taxes a. They satisfy the principle of equity as they are easily matched to the tax payers capacity to pay once assessed. b. They satisfy the principles
Consider an industry with a sole producer, a monopolist. The latter faces cost function C(Q)= Q/2 and aggregate (inverse) demand P(Q)=1 - Q (zero for Q> 1). Illustrate all your ans
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
discuss the validity in zimbabwe of the grounds on which the profit maximising model of the firm has been defended
Suppose that in an isoquant mapping, you should consider three isoquants with 1000, 2000 & 3000 units of output. The price of capital is Rs 2 a unit, and the price of labor is Rs 1
TRADE UNIONS Trade unions are workers' organizations whose objective is to protect the interests of their members. Functions i. To bargain on behalf of their mem
Occurrence of Stagflation Two possible theoretical explanations can be given for the occurrence of stagflation almost all over the world. The first explanation follows directly
A firm hires two risk-neutral workers to assemble bicycles and pays $20 for each assembly.Charlie's marginal cost of allocating effort (measured in dollars) to the production proce
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