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The Degree to Which Market Prices Converge to the Predicted

Question 30

Multiple Choice

The degree to which market prices converge to the predicted equilibrium depends on:


A) the relative magnitudes of the consumer and producer surplus, which serve as proxies for the degree of market power for buyers and sellers respectively.
B) the shape of the demand and supply curves; whether they are relatively flat or relatively steep.
C) whether buyers and sellers can each buy and sell only one unit respectively or whether they can transact multiple units each.
D) whether the price formation process follows centralized trading as in a call-market or de-centralized trading as in Smith's continuous double auction.

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