Question

1. Why do businesses seek an equilibrium price?

Answer 1

1. I think businesses seek an equilibrium price because D. It prevents shortages and surpluses by producing the right number of goods for the right price. Equilibrium price is the market price where goods supplied are meeting goods demanded. It's the point where supply intersects demand.

2. I think the main reason why market prices are not always the same as equilibrium prices is: A. Market prices are often set by buyers rather than by sellers. Equilibrium price is a compromise between supply and demand. But the market price can be higher because sometimes customers ready to pay more, because they think like that: "more expensive=better".

3. I am definitely sure that this is the answer: B. Higher prices cause supply shifts. Higher price = less consumer demand. Consumers won't pay more for the same product if they know that it could be cheaper than its market price. Consumer demand is very important in forming market prices.