Question

State whether these questions are True/False:

1. In order for observed prices to converge to competitive market clearing prices, the participants must understand what they are doing, so they don’t make mistakes in their buying or selling decisions.

2. After an industry is regulated by a federal regulatory agency, companies in the industry can maintain their long run viability by continuing to focus on making better products or services.

3. If unemployed workers become so frustrated from being unable to find new full-time jobs, so they stop looking for jobs, then the unemployment rate will drop.

Answer 1

ANS 1. True , the observed prices are the price that are expected to prevail in the market in the current market situation, the clearing prices are the prices at which all the stock is sold out in the market at this price the market demand is equal to market supply. The oberved prices can be equal to market clearing prices only with detailed market analysis of what to buy and sell and how much to sell.

ANS 2. True, if an industry is regulated by  federal regulatory agency the companies can still maintain their viability in long run by continuing making better products and services and can attain growth due to better outputs.

ANS 3. True, the unemployment rate includes those people who are unemployed and are not looking for the job, so if the unemployed people get frustrated and stop looking for the jobs then the less people will be considered as unemployed and teh unemployment rate will fall.