In the long run, the market price tends to adjust toward the equilibrium point.

Question

Quizplus · Accepted Answer

This is one of the central concepts of microeconomics. The equilibrium price is where the quantity of a good or service demanded by consumers is equal to the quantity supplied by producers. If the market price is above the equilibrium point, there will be a surplus of the good or service, and producers will have an incentive to lower the price to sell more. If the market price is below the equilibrium point, there will be a shortage of the good or service, and producers will have an incentive to raise the price to make more profit. Over time, these forces will push the market price toward the equilibrium point.

In the Long Run, the Market Price Tends to Adjust