When the supply and/or demand curve shift, the new market clearing price is
A) reached instantaneously.
B) reached only after the government intervenes in the market.
C) reached after some period of adjustment.
D) never reached.

Question

Quizplus · Accepted Answer

When the supply and/or demand curve shift, the market is not at equilibrium, thus there is a difference between the quantity supplied and the quantity demanded. This creates either a shortage or a surplus, which leads to a change in the market price. The adjustment process takes some time, as buyers and sellers respond to the new signals created by the shift in the curves. Therefore, the new market clearing price is reached after some period of adjustment.

When the Supply And/or Demand Curve Shift, the New Market