When prices are free to adjust over time,the market price of a good tends to:
A)fall below the equilibrium price in the long run.
B)have no specific relationship to the equilibrium price.
C)equal the equilibrium price in the long run.
D)rise above the equilibrium price in the long run.

Question

Quizplus · Accepted Answer

When prices are free to adjust over time, the market price of a good tends to move towards the equilibrium price. In the absence of any external factors, the forces of supply and demand will eventually push the market price towards the equilibrium price. Therefore, the market price will equal the equilibrium price in the long run.

When Prices Are Free to Adjust Over Time,the Market Price