Fully explain why selling a level of output below the market-clearing equilibrium output level leads to...

Fully explain why selling a level of output below the market-clearing equilibrium output level leads to allocative inefficiency. As part of your response make sure you provide a complete discussion or the source of allocative inefficiency. Also, fully explain why the marginal costs = the marginal benefit.

Expert Solution

Rahul Sunny answered 2 hours ago

Suppose the output or goods market is in equilibrium and the level of taxes in that...

Suppose the output or goods market is in equilibrium and the level of taxes in that country is increased. How does this affect the output market? Explain your answer through the sequence of change(s) on any variable(s) involved.

The market for gasoline in May is in equilibrium, at a market clearing price of $2.50...

The market for gasoline in May is in equilibrium, at a market clearing price of $2.50 per gallon. After Memorial Day, the demand curve for gasoline increases, which causes the demand curve for gasoline to shift to the left, creating a shortage at $2.50 per gallon which causes the market clearing price of gasoline to fall. the demand curve for gasoline to shift to the right, creating a shortage at $2.50 per gallon which causes the market clearing price of...

Fully explain the effects on equilibrium output, interest rates, and the exchange rate from a decrease...

Fully explain the effects on equilibrium output, interest rates, and the exchange rate from a decrease in the domestic price level. (Include graphs)

Fully explain the effects on (domestic) equilibrium output, interest rates, and the exchange rate from an...

Fully explain the effects on (domestic) equilibrium output, interest rates, and the exchange rate from an increase in the foreign country’s money supply under fixed and flexible exchange rates with mobile and immobile capital.(Include Graphs)

Fully explain the effects on equilibrium output, interest rates, and the exchange rate from an increase...

Fully explain the effects on equilibrium output, interest rates, and the exchange rate from an increase in net exports under fixed and flexible exchange rates with mobile and immobile capital. (Include graphs)

Question 1 a) Explain the effect on the equilibrium interest rate and output level of an...

Question 1 a) Explain the effect on the equilibrium interest rate and output level of an increase in the real money supply, state if this is an contractionary monetary or fiscal policy and show the effect graphically. fully label the graph (10) b) Explain the effect on the equilibrium interest rate and output level of a decrease in taxation. State if this is an expansionary or contractionary monetary or fiscal policy and show the effect graphically. (10)

2. Assume the economy is initially in a short-run equilibrium at a level of output below...

2. Assume the economy is initially in a short-run equilibrium at a level of output below the natural rate. a. Use the IS-LM model to graphically illustrate: i) how the economy will adjust in the long-run if the no-policy action is taken. ii) the long-run equilibrium if fiscal policy is used to return the economy to the natural rate of output. b. Explain how investment, the interest rate, and the price level differ in the new long-run equilibrium in the...

Question 11 (1 point) When we say that a price is below the "market clearing level",we...

Question 11 (1 point) When we say that a price is below the "market clearing level",we imply that: Question 11 options: quantity demanded exceeds quantity supplied. the current price is above the equilibrium price. quantity supplied exceeds quantity demanded. the price of the good is likely to decrease. Save Question 12 (1 point) A movement upward along a supply curve in response to a change in a product's own price is a(n): Question 12 options: increase in supply increase in...

Assume that the price in a market is currently below the equilibrium price. Explain exactly why...

Assume that the price in a market is currently below the equilibrium price. Explain exactly why that situation will change by putting the steps in the correct order. 1) the steps repeat until there is a new equilibrium 2) Some buyers are willing to pay more for a good and sellers can raise prices while still selling all of their supply 3) prices begin to rise 4) quantity demanded begins to decrease and quantity supplied increases 5) the shortage becomes...

What happens to the market clearing wage and equilibrium employment if the demand for labor increases?...

What happens to the market clearing wage and equilibrium employment if the demand for labor increases? What happens to the market clearing wage and equilibrium employment if the supply of labor increases? What happens to the market clearing wage and equilibrium employment if the demand and supply of labor increases? What happens to the equilibrium wage and equilibrium employment of a given firm if the demand for product increases? What happens to the equilibrium wage and equilibrium employment of a...

Question