Suppose a market clears and this generates an equilibrium price and quantity.An important outcome of this equilibrium is that it maximises the total benefits to both buyers and sellers.

Question

Quizplus · Accepted Answer

In a market equilibrium, the price and quantity are determined where the quantity demanded by buyers equals the quantity supplied by sellers. At this point, both buyers and sellers are satisfied because they are transacting at a price that they both agree upon. The total benefits to both parties are maximised because this is the point where the market clears and there is no excess supply or demand. Therefore, the statement is true.

Suppose a Market Clears and This Generates an Equilibrium Price