Question:
When the supply curve Sx is backward bending and the demand curve Dx is downward sloping as shown in the figure, there are two equilibria M and N, respectively. Which of the following statements is CORRECT?
When the supply curve Sx is backward bending and the demand curve Dx is downward sloping as shown in the figure, there are two equilibria M and N, respectively. Which of the following statements is CORRECT?
Updated On: Oct 1, 2024
- Only M is stable equilibrium
- Only N is stable equilibrium
- Both M and N are stable equilibria
- Both M and N are unstable equilibria
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The Correct Option is B
Solution and Explanation
The correct option is (B): Only N is stable equilibrium
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