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JAMB Economics 1981 Question 41

Question 41

Price Determination

An equilibrium price

  1. A.keeps excess demand within limits
  2. B.keeps excess supply within limits
  3. C.generates the greatest possible demand and supply
  4. D.generates the greatest possible profits
  5. E.equates the quantity supplied to be equal to the quantity demanded.
Show the answer and explanation

Answer: E (equates the quantity supplied to be equal to the quantity demanded.)

Explanation

At the equilibrium price, quantity supplied equals quantity demanded.