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18 February, 18:17

Does this situation describe an equilibrium?

Every student enrolled in Economics 101 must also attend a weekly tutorial. This year there are two sections offered: section A and section B, which meet at the same time in adjoining classrooms and are taught by equally competent instructors. Section A is overcrowded, with people sitting on the floor and often unable to see the chalkboard. Section B has many empty seats.

This is not an equilibrium. If students from section A attended section B instead, they would be better off: they could get seats and see the chalkboard without incurring any cost (since the section meets at the same time and is taught by an equally competent instructor). Over time, you should expect students to switch from section A to section B until equilibrium is established. TRUE or FALSE

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  1. 18 February, 18:24
    0
    True

    Explanation:

    Equilibrium exists when there are no remaining opportunities for individuals to make themselves better off. In this case, equilibrium will be reached once the students divide themselves between both classrooms and all of them are able to sit on chairs and see the chalkboard.
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