Question
hen quantity supplied equals quantity demanded, there is: a. excess quantity supplied. b. a market-clearing price (equilibrium price). c. excess quantity demanded. d. disequilibrium.
Ask by Whittaker Cervantes. in the United States
Jan 24,2025
Real Tutor Solution
Tutor-Verified Answer
Answer
When supply equals demand, there's a market-clearing price (equilibrium price).
Solution
When the quantity supplied equals the quantity demanded, it indicates that the market is in a state of balance. This situation is referred to as the equilibrium in the market. Therefore, the correct answer is:
**b. a market-clearing price (equilibrium price).**
This means that at this price, the amount of goods that producers are willing to sell matches the amount that consumers are willing to buy, resulting in no excess supply or demand.
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Simplify this solution Mind Expander
When quantity supplied equals quantity demanded, it indicates that the market has reached a state of balance where the interests of both sellers and buyers align perfectly. This scenario is known as the market-clearing price or equilibrium price, where there is neither a surplus nor a shortage of goods. This equilibrium is essential for a well-functioning economy as it helps to allocate resources efficiently. If the price is set above this equilibrium, it can lead to excess supply, while a price below can result in excess demand. Adjustments often occur in response to these dynamics, guiding prices back towards equilibrium.
