Economists assume that when there is a change in supply and/or demand, the market clearing price returns to the equilibrium
A) quickly.
B) slowly.
C) after a protracted negotiation process.
D) after an adjustment period.

Question

Quizplus · Accepted Answer

When there is a change in supply and/or demand, the market does not instantly return to equilibrium. Instead, there is usually an adjustment period during which prices and quantities shift, as market participants respond to the change in conditions. Eventually, the market will settle into a new equilibrium, but this can take time, depending on the nature and magnitude of the shock. Therefore, choice D, "after an adjustment period," is the best answer.

Economists Assume That When There Is a Change in Supply