Question

At the equilibrium price, there are:

Shortages.

Surpluses.

No trades.

No shortages or surpluses.

Answer 1

Equilibrium Price : Equilibrium price is defined as a situation in which the objectives of all firms (profits) are satisfied and the market is cleared. Equilibrium price is the state where both the consumers as well as the producers agree towards the common demand. The producers is ready to supply the exact quantity demanded by the consumer. So the quantity demanded is equal to quantity supplied, thus creating a equilibrium price point. When the price is very high the buyers are not willing to buy. When the price is very low producers are not willing to sell. The quantity of goods sold and bought at equilibrium price is called Equilibrium Quantity.

At the equilibrium price, there are:

(a) Shortage ( Incorrect ) : Shortage occurs when the equantity demanded will be more than the equantity supplied. Here there is exess demand. Equilibrium price is at a point where there is no excess demand nor excess supply.

(b) Surpluses ( Incorrect ) : When the price is above the equilibrium price it creates excess supply over demand of goods, thus creating a surplus. When price is at a point where there is no exess demaand nor excess supply.

(c) No Trades ( Incorrect ) : This is a scenario where the buyer and seller are not in a position to make a trade. But at a equilibrium price, the buyers and sellers are willing to make trade at a given equlibrium price.

(d) No Shortage or Surpluses ( Correct ) : When the market is at a equilibrium price then there will be no exess demand or supply. It means there won't be either shortage nor surplus in the market. It is a no shortage or surplus point.

Hence, OPTION(d) No Shortage or Surpluses is the correct answer.