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Market Equilibrium & Price Controls · Question 6 of 52

Question 6

MediumOriginal question

Why is the equilibrium price called a stable price?

Options for question 6

Show the answer and explanation
CorrectNot quiteAnswer A

Correct answer: A

Explanation

  1. Above it, unsold stock makes sellers cut prices; below it, unmet demand makes buyers bid prices up.

  2. So the market keeps returning to the equilibrium until demand or supply itself changes.

Worth noting

The equilibrium does move when demand or supply shifts; it is stable, not fixed.

Concept
Stability of equilibrium
Typical time
70 s
Your time
—
The rule this testsEquilibrium price and quantity
Practise this chapter →

Ten questions from Market Equilibrium & Price Controls, at your own pace.

Practise this chapter →

Ten questions from Market Equilibrium & Price Controls, at your own pace.