In general,non-equilibrium prices occur because:
A)information is imperfect and adjustment is costly.
B)supply curves shift along stationary demand curves.
C)demand curves shift along stationary supply curves.
D)monopolists charge prices above marginal cost.

Question

Quizplus · Accepted Answer

Non-equilibrium prices occur when there is imperfect information and adjustment is costly. This means that prices may not adjust to fully reflect changes in supply or demand, resulting in a non-equilibrium price. Factors such as transaction costs, search costs, and information asymmetry can all contribute to non-equilibrium prices. Options B and C describe shifts in supply and demand curves, which can lead to new equilibrium prices, but do not necessarily result in non-equilibrium prices. Option D describes a specific case of non-equilibrium pricing behavior by monopolists, but is not a comprehensive explanation for all instances of non-equilibrium pricing.

In General,non-Equilibrium Prices Occur Because