Multiple Choice
If Sidney Airlines is currently breaking even in a perfectly competitive market, which of the following must be true?
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3. The Market Forces of Supply and Demand
Market Equilibrium
Multiple Choice
In the context of market equilibrium, in which situation are buyers capable of taking advantage of sellers?
A
When demand equals supply
B
When there is a shortage of goods in the market
C
When the market price is above the equilibrium price
D
When there is a surplus of goods in the market
Verified step by step guidance1
Understand the concept of market equilibrium, which occurs when quantity demanded equals quantity supplied, meaning there is no shortage or surplus in the market.
Recognize that when the market price is above the equilibrium price, a surplus of goods occurs because sellers want to sell more than buyers want to buy at that price.
Analyze how a surplus benefits buyers: since there are more goods available than buyers want, sellers may lower prices to clear excess inventory, allowing buyers to purchase goods at lower prices.
Contrast this with a shortage situation, where demand exceeds supply, leading to higher prices and less advantage for buyers.
Conclude that buyers can take advantage of sellers primarily when there is a surplus of goods in the market, as sellers compete to attract buyers by reducing prices.
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