Get premium membership and access questions with answers, video lessons as well as revision papers.
The following are common errors that students make when discussing supply and demand. What is the mistake in each?
At equilibrium, demand equals supply.
The mistake is that they omit the concept of all other factors kept constant.
Therefore the correct answer is that at ceteris paribus, at equilibrium demand equals supply.
Another mistake is that at equilibrium it is the quantity demanded equaling the quantity supplied and not quantity is equal to supply.
The quantity of demand is greater than the quantity of supply.
It should be that below the equilibrium price, the quantity of demand is greater than the quantity of supply.
They move along the line from both ends to an equilibrium in the middle
The mistake is that nothing moves along the line from both ends but the supply and demand curve intersect at a point called equilibrium.
The increase in demand causes an increase in supply
An increase in demand only causes an increase in the price levels which shift towards the right of the demand and supply curve. Hence, an increase in the price triggers the suppliers to supply more.
chris10 answered the question on March 27, 2018 at 17:20
- After hurricane Andrew hit Florida and Louisiana, consumers expressed outrage at the high prices being charged for chainsaws, generators and bottled water. If government followed...(Solved)
After hurricane Andrew hit Florida and Louisiana, consumers expressed outrage at the high prices being charged for chainsaws, generators and bottled water. If government followed consumers’ demands and imposed price ceilings in these markets, what is likely to be the result?
Date posted: March 27, 2018. Answers (1)
- (The Meaning of Full Employment) When the economy is at full employment, is the unemployment rate at zero percent? Why or why not? How would...(Solved)
(The Meaning of Full Employment) When the economy is at full employment, is the unemployment rate at zero percent? Why or why not? How would a more generous unemployment insurance system affect the full employment figure?
Date posted: March 25, 2018. Answers (1)
- Write short notes on the concept of quasi-rent?(Solved)
Write short notes on the concept of quasi-rent?
Date posted: March 25, 2018. Answers (1)
- Define wages and discuss the various kinds of labour?(Solved)
Define wages and discuss the various kinds of labour?
Date posted: March 25, 2018. Answers (1)
- Define trade union.What are the main objectives of trade union?(Solved)
Define trade union.What are the main objectives of trade union?
Date posted: March 25, 2018. Answers (1)
- Discuss the factors that affect relative wages(Solved)
Discuss the factors that affect relative wages.
Date posted: March 25, 2018. Answers (1)
- Critically examine the Ricardian Theory of rent(Solved)
Critically examine the Ricardian Theory of rent
Date posted: March 25, 2018. Answers (1)
- Discuss the methods of public debt redemption?(Solved)
Discuss the methods of public debt redemption?
Date posted: March 24, 2018. Answers (1)
- Discuss the role of budget as an instrument of planning?(Solved)
Discuss the role of budget as an instrument of planning?
Date posted: March 24, 2018. Answers (1)
- Define the following (a) Deficit financing (b) Budget (c) Fiscal policy(Solved)
Define the following (a) Deficit financing (b) Budget (c) Fiscal policy
Date posted: March 24, 2018. Answers (1)
- (a) What is public expenditure (b) Why has public expenditure increased significantly during recent years?(Solved)
(a) What is public expenditure (b) Why has public expenditure increased significantly during recent years?
Date posted: March 24, 2018. Answers (1)
- (a) What is public borrowing? (b) Discuss the various kinds of public borrowing?(Solved)
(a) What is public borrowing? (b) Discuss the various kinds of public borrowing?
Date posted: March 24, 2018. Answers (1)
- Discuss the principles of taxation?(Solved)
Discuss the principles of taxation?
Date posted: March 24, 2018. Answers (1)
- Differentiate between proportional and progressive tax system(Solved)
Differentiate between proportional and progressive tax system.
Date posted: March 24, 2018. Answers (1)
- What do we mean by Economic development?(Solved)
What do we mean by Economic development?
Date posted: March 24, 2018. Answers (1)
- What are the objectives of International Monetary Fund(I.M.F)?(Solved)
What are the objectives of International Monetary Fund(I.M.F)?
Date posted: March 24, 2018. Answers (1)
- What are the main objectives of the fiscal policy?(Solved)
What are the main objectives of the fiscal policy?
Date posted: March 24, 2018. Answers (1)
- Explain the types of elasticity of demand(Solved)
Explain the types of elasticity of demand.
Date posted: March 23, 2018. Answers (1)
- List the assumptions of the law of diminishing marginal utility(Solved)
List the assumptions of the law of diminishing marginal utility.
Date posted: March 23, 2018. Answers (1)
- Explain the exemptions of the law of diminishing marginal utility?(Solved)
Explain the exemptions of the law of diminishing marginal utility?
Date posted: March 23, 2018. Answers (1)