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Explain how the Price Mechanism Brings about the Equilibrium Price and also how and why the Government Should Intervene in the Market Place
Market equilibrium is a situation where at a certain price level, the quantity supplied by producer and the quantity demanded by consumers are equal. It is a situation where there is no tendency for change in either price of product or quantity supplied and demanded. This situation is brought about by forces of the price mechanism, the interplay of demand and supply market forces.
The situation of market equilibrium is represented by the above figure. Where the two curves of demand and supply intersect at Pe, the equilibrium price Pe and the equilibrium quantity Qe is established.…
- Explain how the Price Mechanism Brings about the Equilibrium Price and also how and why the Government Should Intervene in the Market Place
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