In the competitive equilibrium model,
A)utility and marginal cost are equated.
B)only seller behavior is analyzed.
C)only buyer behavior is analyzed.
D)the willingness to sell and the willingness to buy are equated.
E)few individuals benefit from market trade.

Question

Quizplus · Accepted Answer

In the competitive equilibrium model, the willingness to sell and the willingness to buy are equated. This means that the market will reach an equilibrium price and quantity where the amount that individuals are willing to sell (based on their marginal cost) equals the amount that individuals are willing to buy (based on their marginal utility). Both buyer and seller behaviors are analyzed in this model. The aim of market trade is to benefit both buyers and sellers by allowing them to exchange goods or services that they value differently.

In the Competitive Equilibrium Model