GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Supply determines market price because the seller sets the price.
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The price is determined by the highest price consumers are willing to pay.
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The price is determined by the lowest price producers are willing to accept.
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The market clearing price is where quantity demanded is equal to quantity supplied.
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Detailed explanation-1: -Supply is generally considered to slope upward: as the price rises, suppliers are willing to produce more. Demand is generally considered to slope downward: at higher prices, consumers buy less.
Detailed explanation-2: -It’s a fundamental economic principle that when supply exceeds demand for a good or service, prices fall. When demand exceeds supply, prices tend to rise. There is an inverse relationship between the supply and prices of goods and services when demand is unchanged.
Detailed explanation-3: -A market-clearing price is the price of a good or service at which quantity supplied is equal to quantity demanded, also called the equilibrium price. The theory claims that markets tend to move toward this price.
Detailed explanation-4: -Shifts in supply or demand curves move the equilibrium price and quantity. If demand increases, equilibrium price and quantity both increase. If demand decreases, equilibrium price and quantity both decrease. If supply increases, equilibrium price decreases, and quantity increases.