Question

What is a reason that market prices are not always thr same as equilibrium prices?

A. Market prices are often set by buyers rather than suppliers
B. Supply and demand are not well-understood by business owners.
C. The equilibrium is not always the most profitable price point.
D. It is not always practical for businesses to change their prices on a daily basis in order to reflect the equilibrium price

Answer 1

D. It is not always practical for businesses to change their prices on a daily basis in order to reflect the equilibrium price.

This option highlights the reality that businesses may have fixed pricing strategies, costs of changing prices, and other operational considerations that prevent them from adjusting prices frequently to align with equilibrium prices. As a result, market prices can deviate from equilibrium prices, leading to inconsistencies in the market.