The Most Important Characteristic of the Equilibrium Price Is That

question 139

Multiple Choice

The most important characteristic of the equilibrium price is that it:

• A) guarantees that producers earn profit.
• B) clears the market.
• C) increases the quantity demanded.
• D) decreases the quantity demanded.

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Definitions:

Total Utility

The total satisfaction received from consuming a particular quantity of goods or services.

Money Income

The complete sum of money earned by an individual or a household that includes earnings from work, salaries, and additional income sources.

Budget Line

A graphical depiction of all possible combinations of two goods that can be purchased with a given budget and prices.

Price Ratio

The ratio of the prices of two goods or services, often used in the context of trade or barter.