An equilibrium price splits the uses of the good into ________ part(s).
A) one
B) two
C) three
D) four or more

Question

Quizplus · Accepted Answer

An equilibrium price splits the uses of the good into two parts: 1) consumer use, as people buy the good for their personal consumption, and 2) producer use, as businesses buy the good as an input for their production processes. This is because at the equilibrium price, the quantity demanded by consumers is exactly equal to the quantity supplied by producers, resulting in a market clearing price.

An Equilibrium Price Splits the Uses of the Good into ________