The particular price that results in quantity supplied being equal to quantity demanded is the best price because it
A)maximizes costs of the seller.
B)maximizes tax revenue for the government.
C)maximizes the combined welfare of buyers and sellers.
D)minimizes the expenditure of buyers.

Question

Quizplus · Accepted Answer

The particular price that results in quantity supplied being equal to quantity demanded, also known as the equilibrium price, maximizes the combined welfare of buyers and sellers. At this price, the market reaches efficiency and there is no excess supply or demand. Both buyers and sellers are able to find mutually beneficial transactions at this price, resulting in the highest possible total satisfaction for both parties. Thus, the equilibrium price maximizes the overall welfare of the market participants.

The Particular Price That Results in Quantity Supplied Being Equal