Question

The fair market value of property received in a sale or other disposition has been defined by the courts as the price at which property will change hands between a willing seller and a willing buyer when neither is compelled to sell or buy.

a) True
b) False

Answer 1

The claim is false because various market factors can compel sellers to offer goods at prices below equilibrium, such as a need to clear inventory, increase market share, respond to competition, or economic conditions.

Step-by-step explanation:

The statement "In the goods market, no seller would be willing to sell for less than the equilibrium price" is false because the dynamics of the goods market are influenced by various factors that may compel a seller to sell at prices below the equilibrium.

For example, sellers may need to clear out inventory quickly due to perishability, space constraints or to improve cash flow, leading to sales at lower prices. Moreover, competition may drive prices down if a seller wishes to gain market share or beat a competitor's pricing. Additionally, external factors such as economic downturns can result in lowered consumer spending power, which might force sellers to reduce prices to attract buyers.