Question

Which of the following is not a reason why market equilibrium is significant?
Select one:
a. Because deviations from equilibrium send signals to buyers and sellers to change their plans.
b. Because it perfectly coordinates the plans of buyers and sellers.
c. Because it is the price where quantity demanded equals quantity supplied.
d. Because it determines the inherent usefulness and value of the products we buy.
e. none of the above

Answer 1

IMO, to a point options A and B are fulfilled with market equilibrium. A is true because if there is surplus for instance, buyers would bid the price up until it reaches back to the equilibrium price. Similar idea for shortage. B is also true because the buyers control the demand and the sellers control the supply, so it figures how the quantity of demand and quantity of supply required to reach market equilibrium.

C is obviously true because that is the point of market equilibrium.

D is not necessarily true. Market equilibrium is plotted where the quantity demanded = quantity supplied, and you can only tell the equilibrium price and equilibrium quantity. You cannot explain marginal utility. The "inherent usefulness and the value of products" has much to do with the utility of a product, which is not explained through market equilibrium (remember it's plotted on a graph with quantity v. price, not quantity vs. utils)

But that's my take.

Answer 2

So yeah D is not a reason why market equilibrium is significant in my perspective. The rest can be explained through market equilibrium

@geerky42 any suggestions?

Answer 3

I agree with you @justjm

Answer 4

Thank you so much! @justjm

Answer 5

he said D lol