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Explain What Is Wrong with Saying That Market Equilibrium Occurs

question 23

Essay

Explain what is wrong with saying that market equilibrium occurs when "supply equals demand."


Definitions:

Variable Costs

Costs that change in proportion to the good or service that a business produces.

Shut Down

The cessation of operations, often temporarily, by a business or organization.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent or salaries.

Marginal Costs

The added cost of producing one additional unit of a product or service.

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