ECONOMICS
PRICE CEILINGS AND FLOORS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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What is the perfect price for a supplier to sell a product & make sure it does not stay for long periods in the store? Also called market clearing price
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surplus
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shortage
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equilibrium price
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subsidy
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Explanation:
Detailed explanation-1: -The equilibrium price is also sometimes called the market-clearing price.
Detailed explanation-2: -The equilibrium is the only price where quantity demanded is equal to quantity supplied.
Detailed explanation-3: -What Happens If the Price Falls Below the Market Clearing Price? If price falls below the market clearing price, buyers will buy up all of the available goods, causing a shortage in the market. This shortage causes prices to rise, until they reach the equilibrium price.
Detailed explanation-4: -Equilibrium price is also called market clearing price because at this price the exact quantity that producers take to market will be bought by consumers, and there will be nothing ‘left over’.
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