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Homework answers / question archive / In early economics, we learn that economies have an equilibrium price level where supply and demand intersect
In early economics, we learn that economies have an equilibrium price level where supply and demand intersect. I'm just wondering if all real-life economies are currently at an equilibrium price level?
No, all the real-life economies are not at an equilibrium price level because, in reality, the shape of the demand and the supply curves are consistently changing as the determinants are changing over time. It implies that the equilibrium point is moving and the quantity and the prices are trying to keep pace with the changing equilibrium. It takes a long time to reach the equilibrium price as the taste, and the preferences of the people and the income level keep changing.