Browse by Stream
QnA
Home
QnA
Go To Your Study Dashboard

Get Answers to all your Questions

header-bg qa
  • Home
  • Management
  • Directions: Read the passage and answer the question

Directions: Read the passage and answer the question

In the annals of economic theory, the concept of equilibrium holds a pivotal position. It is the fulcrum upon which the dynamics of supply and demand, prices and quantities, hinge. At its core, equilibrium denotes a state of balance, where the forces at play reach a stable, unchanging configuration. Yet, beneath this seemingly tranquil surface lies a maelstrom of intricate interactions.

 

The equilibrium price, that delicate point at which the quantity supplied equals the quantity demanded, is often hailed as the linchpin of market efficiency. It represents the elusive meeting point of consumer preferences and producer capabilities, a juncture where neither party harbours incentive for deviation. However, in its pursuit, lies the paradox of market behaviour. The inexorable law of diminishing returns shadows the path to equilibrium, introducing a convolution of shifting production costs and marginal utilities.

 

Moreover, equilibrium is not a static terminus, but a dynamic process subject to the caprices of exogenous shocks and endogenous shifts. The interplay of external factors, from technological advancements to geopolitical events, can send ripples through the placid waters of equilibrium, propelling markets into unforeseen trajectories. Internally, changes in consumer tastes or production technologies can precipitate a cascade effect, altering the equilibrium state.

 

Critics argue that an overemphasis on equilibrium obscures the very essence of economic reality—an ever-evolving, turbulent landscape. The myopic fixation on a singular point of balance overlooks the continuous dance of disequilibrium, where imbalances and disruptions spark innovation, adaptation, and progress.

 

In the quest for economic insight, equilibrium remains an indispensable tool, providing a framework for analysis and prediction. Yet, its limitations as a reflection of the dynamic nature of markets cannot be ignored. To grasp the true essence of economic phenomena, one must be willing to navigate the turbulent currents that lie beyond the tranquil façade of equilibrium.

 

Question:

What is the role of the equilibrium price in market efficiency?

 

Option: 1

 It represents a point of balance between consumer preferences and producer capabilities.

 


Option: 2

It is the point at which diminishing returns cease to affect production.


Option: 3

It serves as a reflection of the dynamic nature of markets.

 


Option: 4

It signifies a state of balance between technological advancements and geopolitical events.


Answers (1)

best_answer

The passage states that the equilibrium price is the point at which the quantity supplied equals the quantity demanded, representing a meeting point of consumer preferences and producer capabilities.

 

Posted by

Pankaj Sanodiya

View full answer

Similar Questions

Latest Question