Question

the equilibrium price ______.

a. only affects goods but not services
b. occurs when supply equals demand for a good or service
c. is dictated by consumers
d. results in higher demand for goods and services
e. means a product shortage exists

Explanation:

• Option A: Equilibrium price applies to both goods and services, so A is wrong.
• Option B: By definition, equilibrium price is where supply (quantity supplied) equals demand (quantity demanded) for a good or service, so B is correct.
• Option C: Equilibrium price is determined by the interaction of supply and demand, not just consumers, so C is wrong.
• Option D: Equilibrium price is the balance point, not something that directly causes higher demand; demand is affected by many factors, so D is wrong.
• Option E: At equilibrium, quantity supplied equals quantity demanded, so there's no shortage (or surplus), so E is wrong.

Answer:

B. occurs when supply equals demand for a good or service