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Walras Believed That the Speed of Convergence of Market Prices

Question 21

Multiple Choice

Walras believed that the speed of convergence of market prices to the predicted equilibrium price would depend on the relative magnitude of excess demand or excess supply at prices slightly higher or slightly lower than the predicted equilibrium respectively. This would imply that prices convergence to the predicted equilibrium will be faster if:


A) The demand and supply curves are relatively flat.
B) The demand and supply curves are relatively steep.
C) The bids are descending and the asks are ascending.
D) The auctioneer raises the prices when there is a surplus and lowers that price when there is a shortage.

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