Multiple Choice
In the context of market equilibrium, the intersection of demand and supply determines the (one word) price for money. What is this price called?
98
views
3. The Market Forces of Supply and Demand
Market Equilibrium
Multiple Choice
Investors sell stock at the:
A
highest possible price
B
lowest possible price
C
government-set price
D
market equilibrium price
Verified step by step guidance1
Understand the concept of market equilibrium price: it is the price at which the quantity of stock that investors want to sell equals the quantity that buyers want to purchase.
Recognize that investors aim to sell their stock at the highest possible price they can get, but the actual transaction price is determined by the interaction of supply and demand in the market.
Recall that government-set prices are typically price controls, which are not the usual mechanism for stock prices in a free market.
Identify that the market equilibrium price balances the interests of both buyers and sellers, making it the price at which stocks are actually sold.
Conclude that investors sell stock at the market equilibrium price because it reflects the highest price buyers are willing to pay and the price sellers are willing to accept.
Related Videos
Related Practice
