Can There Be An Equilibrium Price Under Such Conditions?
The term equilibrium price is used in economics to define the price at which the demand for a good is equal to the supply of the good. If the prices of the goods rise, the producers or suppliers would produce less. The contractors would purchase more in response to a rise in the prices. The demand is more than the supply of goods, which would result in price disequilibrium. On the other hand, if the prices of the goods fall, the producers or suppliers would produce more. The contractors would purchase less in response to a fall in the prices. The supply is more than the demand of goods, which also results in price disequilibrium. Therefore, in both the situations, there cannot be an equilibrium price, as the demand is not equal to the supply.
