When a market is not in equilibrium:
A)government intervention is required to achieve equilibrium.
B)firms will increase contributions to political action committees.
C)the economic motives of sellers and buyers will move the market to its equilibrium.
D)it will simply stay in a state of disequilibrium.

Question

Quizplus · Accepted Answer

In a market that is not in equilibrium, there will be either excess demand or excess supply. As a result, buyers and sellers will have economic motives to change their behavior, such as lowering prices or increasing production, until the market reaches equilibrium. This process of self-correction is known as the market mechanism, and it does not require government intervention or lobbying by firms. Option A and B are incorrect because they suggest either a need for external intervention or a reliance on political influence. Option D is also incorrect because it assumes a static state of disequilibrium, whereas markets are constantly adjusting to changing conditions.

When a Market Is Not in Equilibrium