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.
The services of a certified psychologist cost $110 per hour, and an extended health plan covers 50 percent of that cost. Under the plan, the clients covered used 625 hours of this
External Debt Problem External debt refers to debt owing by one country to another. External debt is a more serious problem than internal debt because the payment of interest
Importance of Cross Elasticity Knowledge of cross elasticity is necessary when the government wants to impose a tariff on an imported commodity to protect a domestic industry.
Real Rigidities in the Labour Market New Keynesian theories of the labour market help in explaining the existence of involuntary unemployment. The theories also attempt to
Green Shield Insurance gives NEMO Corporation with coverage for prescriptions, dental work, and extended health services. Every subscriber uses $435 worth of dental services per ye
what is market
what is international pricing method?
The Determination of the Value Money Since money is primarily a medium of exchange, the value of money means what money will buy. If at one time a certain amount of money
Economics for Accountants A few teachers and some students have questioned the rationale for including economics in a course of study for professional accountants. In order to
what is deadweight loss calculation?
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: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd