When prices are free to adjust over time, in the long run, the market price of a good tends to
A) rise above the equilibrium price in the long run.
B) equal the equilibrium price.
C) fall below the equilibrium price in the long run.
D) have no specific relationship to the equilibrium price.

Question

Quizplus · Accepted Answer

In the long run, when prices are free to adjust, market forces will lead the price to its equilibrium level where the quantity demanded equals the quantity supplied. This means that the price will neither be too high nor too low and will settle at the equilibrium price. Therefore, the correct choice is B, which states that the market price of a good tends to equal the equilibrium price in the long run.

When Prices Are Free to Adjust Over Time, in the Long