Question

The equilibrium price is often called the market-clearing price because:

a. all market producers are satisfied.
b. sellers make the most money and buyers have the lowest prices.
c. there is neither excess demand nor excess supply.
d. all market consumers are satisfied.

Answer 1

(c) took the test edg2020

Step-by-step explanation:

Answer 2

The correct answer is option (c).

Step-by-step explanation:

Equilibrium price occurs at the intersection of the demand and supply curves. That is, a particular quantity that both the supplier and the buyer are willing to exchange at a particular price.

At any price below the equilibrium price, quantity demanded would be more than the quantity supply, so this scenario creates a shortage (excess demand), so producers would be willing to sell the limited quantity at a higher price, preferably at the equilibrium price.

At any price above the equilibrium price, the quantity supply would be more than the quantity demanded, so there would be a surplus (excess supply) in the market. Producers would be willing to collect a lower price, preferably the equilibrium price.