Multiple Choice
Which of the following is most likely to occur as a result of a decrease in the equilibrium price for a product?
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3. The Market Forces of Supply and Demand
Market Equilibrium
Multiple Choice
Equilibrium occurs when supply and demand coordinate to:
A
ensure that all consumers receive the good for free
B
minimize production costs for firms
C
determine a price at which quantity supplied equals quantity demanded
D
maximize total revenue for producers
Verified step by step guidance1
Understand the concept of market equilibrium: it is the point where the quantity of a good that consumers want to buy equals the quantity that producers want to sell.
Recall the definitions of supply and demand: demand represents consumers' willingness and ability to buy a good at different prices, while supply represents producers' willingness and ability to sell a good at different prices.
Recognize that equilibrium is found by setting the quantity demanded equal to the quantity supplied, which determines the equilibrium price and quantity.
Note that at this equilibrium price, there is no surplus or shortage of the good, meaning the market clears efficiently.
Conclude that the correct description of equilibrium is the price at which quantity supplied equals quantity demanded, rather than the other options like free goods, cost minimization, or revenue maximization.
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