Why do businesses seek an equilibrium price?.
(1 point)
Responses
It ensures that competitors cannot offer lower prices.
It ensures that competitors cannot offer lower prices.
It attracts the largest possible number of consumers to the business.
It attracts the largest possible number of consumers to the business.
It provides the highest possible prices that consumers will pay for each product.
It provides the highest possible prices that consumers will pay for each product.
It prevents shortages and surpluses by producing the right number of goods for the right price.
It prevents shortages and surpluses by producing the right number of goods for the right price.
It prevents shortages and surpluses by producing the right number of goods for the right price.
The correct answer is:
It prevents shortages and surpluses by producing the right number of goods for the right price.
The correct answer is: It prevents shortages and surpluses by producing the right number of goods for the right price.
To understand why businesses seek an equilibrium price, we need to understand what an equilibrium price is. In economics, an equilibrium price is the price at which the quantity of goods supplied by producers matches the quantity of goods demanded by consumers. This is the price at which the market is in balance, with neither a shortage nor a surplus of goods.
Businesses seek an equilibrium price because it helps them avoid unnecessary costs and risks. When the price is too high, businesses may not be able to sell all of their products, leading to a surplus. On the other hand, if the price is too low, businesses might not be able to meet the demand, leading to a shortage. Both scenarios can result in financial losses for the business.
By aiming for an equilibrium price, businesses can match their production levels to the demand in the market. This allows them to avoid overproducing or underproducing, which can lead to wastage of resources or missed opportunities.
Additionally, an equilibrium price benefits consumers by ensuring that they can find the products they need at a reasonable price. If the price is too high, consumers may be discouraged from buying, and if it's too low, it could indicate poor quality or unsustainable business practices.
In summary, seeking an equilibrium price helps businesses prevent shortages and surpluses, optimize production levels, and provide products to consumers at fair prices.