Why does equilibrium in the market for a traded good not occur where that country's quantity demanded equals quantity supplied?
A)Because equilibrium occurs where demand equals supply.
B)Because markets are never in equilibrium.
C)Because some of the good is imported or exported.
D)Because there are several demand curves, and the market can't choose between them.
E)All of the above are correct.

Question

Quizplus · Accepted Answer

Even if the domestic quantity demanded and supplied are equal, there can be trade flows of that good due to imports or exports. This means that the domestic price will be affected by global supply and demand, leading to a different equilibrium point than if there were no international trade. Options A, B, and D are incorrect because equilibrium does occur where demand equals supply, markets can be in equilibrium, and there is only one equilibrium point regardless of the number of demand curves. Therefore, option C is the correct answer.

Why Does Equilibrium in the Market for a Traded Good