When prices are free to adjust over time,in the long run,the market price of a good tends to:
A)Rise above the equilibrium price in the long run.
B)Equal the equilibrium price.
C)Fall below the equilibrium price in the long run.
D)Have no specific relationship to the equilibrium price.

Question

Quizplus · Accepted Answer

In the long run, competitive markets will adjust to achieve equilibrium. This means that the quantity demanded and supplied will be equal at the market price. If prices are free to adjust, any deviation from the equilibrium price will cause either a surplus or a shortage, which will generate pressures for prices to move back towards the equilibrium level. Therefore, in the long run, the market price of a good will tend to equal the equilibrium price.

When Prices Are Free to Adjust Over Time,in the Long