Equilibrium is the point at which demand and quantity supplied are equal. In a free market, consumers have a say in the price of things .Business will lower the price to sell out products, if they’re not in demand. If a product is in demand, businesses will raise the price, because they know consumers are willing to pay that high. In a command economy prices are fixed by the central authority, there is no equilibrium. However there are price ceiling and price floors, which is like the complete opposite of equilibrium. Price ceiling is when the government places a limit on how high a producer may charge for his product. Price floor is when a price is leveled above the equilibrium prices. The government does this to have control over the company’s but what they don’t realize is this tight hold is only sending the economy into poverty and depression
Equilibrium is the point at which demand and quantity supplied are equal. In a free market, consumers have a say in the price of things .Business will lower the price to sell out products, if they’re not in demand. If a product is in demand, businesses will raise the price, because they know consumers are willing to pay that high. In a command economy prices are fixed by the central authority, there is no equilibrium. However there are price ceiling and price floors, which is like the complete opposite of equilibrium. Price ceiling is when the government places a limit on how high a producer may charge for his product. Price floor is when a price is leveled above the equilibrium prices. The government does this to have control over the company’s but what they don’t realize is this tight hold is only sending the economy into poverty and depression