Question

A house owner wants to maintain his house. What is the economic term for this desire? What enables a baker to obtain new shoes from a cobbler who doesn't need any baked goods?

Equilibrium prices will spontaneously establish themselves in a competitive market and will persist until things changes?

Which describes a price mechanism through which the government may correct a failing market?

Which is most likely to increase the supply of soldiers for an all-volunteer army?

Answer 1

The economics term which is used for this is Scarcity . As we know resources are scare and wants are endless. Therefore only the best alternatives that is choosing best alternative which solve such economics problems.

This kind of trade is called barter trade where goods are echanged with goods. But in this question cobbler who doent need baked food is the probelm of doubble coincidence of wants. Both the parties shhould have both goods which they want to exchanged and want to get then only barter exchange will take place.

Yes equlibrium price will simultaniously changed in the market and establish E.P. until these changes persist. It is due to difference between QD. and Q.S.. If Q.D is more than Q.S. there will be competition amonmg buyers and prices will push up until E.Price is achieved. Similarly if Q.S. is more than Q.D there will be cometition among seller and prices will go down until E.Price is achieved.

Government may intervine in the prices and market through fixing the price above or below the market price or prevailing price. It is done by the government through floor price or procure price which is set by the government above the equilibrium. In the same way government may fix the prices of essential commodities below the market price which uis known as maximum price or rationing price. In this way government can correct the market failure by intervining in the price machenism.

Supply of soilders in army on voletering basis can only be increased by the government through minimum wage legislation. Goverment can attract more to join army by providing minimum wages to them whioch are alywas heigher then the market value of labour.