Use the following to answer question(s): Market Failure

-(Exhibit: Market Failure) A competitive market, free of market failures, will achieve an equilibrium price _______ and an equilibrium quantity _______ .
A) A; E
B) A; G
C) B; F
D) C; E

Question

Use the following to answer question(s): Market Failure
 
-(Exhibit: Market Failure) A competitive market, free of market failures, will achieve an equilibrium price _______ and an equilibrium quantity _______ .
A) A; E 
B) A; G 
C) B; F 
D) C; E

Quizplus · Accepted Answer

In a competitive market free of market failures, the equilibrium price will be at point B and the equilibrium quantity will be at point F. This is because at this price, the quantity demanded by consumers is equal to the quantity supplied by producers, resulting in neither a shortage nor a surplus of the good. Points A and C represent either a shortage or surplus, indicating that the market is not in equilibrium. Point E is only a potential equilibrium point, but not the actual equilibrium point.

Use the Following to Answer Question(s): Market Failure