A competitive market with flexible prices and many buyers and sellers will:
A)eliminate surpluses.
B)eliminate shortages.
C)reach equilibrium.
D)eliminate surpluses and shortages and reach equilibrium.

Question

Quizplus · Accepted Answer

In a competitive market, prices can fluctuate depending on supply and demand. If there is a surplus of goods, prices will fall until the surplus is eliminated. If there is a shortage of goods, prices will rise until the shortage is eliminated. Eventually, the market will reach equilibrium where the quantity demanded equals the quantity supplied and there is neither a shortage nor a surplus. Therefore, a competitive market with flexible prices and many buyers and sellers will eliminate surpluses and shortages and reach equilibrium.

A Competitive Market with Flexible Prices and Many Buyers and Sellers