Why do businesses seek an equilibrium price?
A.
It ensures that competitors cannot offer lower prices.
B.
It attracts the largest possible number of consumers to the business.
C.
It provides the highest possible prices that consumers will pay for each product.
D.
It prevents shortages and surpluses by producing the right number of goods for the right price.
D. It prevents shortages and surpluses by producing the right number of goods for the right price.
It's D, I just took the Quick Check
The correct answer is D. It prevents shortages and surpluses by producing the right number of goods for the right price.
Businesses seek an equilibrium price because it allows them to balance supply and demand effectively. The equilibrium price is the price at which the quantity of goods or services supplied equals the quantity demanded. At this price, there are no shortages (where demand exceeds supply) or surpluses (where supply exceeds demand).
To determine the equilibrium price, businesses analyze market conditions and factors such as consumer preferences, production costs, and competition. By understanding these factors, businesses can adjust their prices and production levels to meet consumer demand. This helps ensure that they are not producing too many or too few goods, and that they are selling their products at a price that consumers are willing to pay.
By achieving an equilibrium price, businesses can optimize their operations, minimize waste, and avoid the potential loss of revenue associated with shortages or surpluses. It allows them to operate efficiently and effectively in the market, ensuring a stable supply of goods at a price that consumers are willing to pay.