The equilibrium price in the market represents the:
A) value of the good in its next highest-valued use.
B) value of the good in all its uses.
C) price of the good in its lowest-valued use.
D) average cost of producing the good.

Question

Quizplus · Accepted Answer

The equilibrium price is the price at which the quantity demanded of a good or service equals the quantity supplied, meaning all buyers who are willing and able to buy the good at the equilibrium price can do so, and all sellers who are willing and able to sell the good at the equilibrium price can do so. Therefore, the equilibrium price represents the value of the good in its next highest-valued use, since those who are willing and able to pay a higher price for the good will not be able to buy it at the equilibrium price.

The Equilibrium Price in the Market Represents The