Which of the following is true of equilibrium in a purely (or perfectly) competitive market for good X? A

Marketing Jan 12, 2021

Which of the following is true of equilibrium in a purely (or perfectly) competitive market for good X?

A. A shortage of good X exists.

B. The quantity demanded equals the quantity supplied of good X.

C. A surplus of good X exists.

D. The government regulates the quantity of good X produced at the market price.

E. Dead-weight loss exists.

Expert Solution

The correct answer is: B. The quantity demanded equals the quantity supplied of good X.

In a purely competitive market, there is no government intervention in the market and therefore, the equilibrium quantity demanded and sold in the market is determined by the forces of demand and supply.

At the equilibrium point, the quantity supplied is equal to the quantity demanded. This means that there is no surplus nor shortage when the market is at equilibrium.

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