Identify the truthfulness of the following statements: I. Equilibrium analysis helps economists determine the market-clearing price.
II. Comparative statics help economists analyze how a change in an exogenous variable affects the level of a related endogenous variable in an economic model.
A)Both I and II are false
B)Both I and II are true
C)I is true; II is false
D)I is false; II is true

Question

Quizplus · Accepted Answer

Both statements I and II are true. Equilibrium analysis is used to determine the market-clearing price in a market where supply and demand are equal. Comparative statics, on the other hand, are used to analyze the effects of changes in exogenous variables on the level of endogenous variables in an economic model. Both statements are true. Equilibrium analysis is used to determine the price at which the quantity demanded equals the quantity supplied, while comparative statics allows us to analyze how changes in exogenous variables affect endogenous variables in an economic model.

Identify the Truthfulness of the Following Statements: I