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c. equilibrium price changes substantially when the demand for the good changes.
When a supply curve is relatively flat, the equilibrium price changes substantially when the demand for the good changes.
What is a supply curve?
In economics, the supply curve is a graphic depiction of the relationship between the price of a good and the amount of it that a seller is willing and able to supply. The graph's horizontal axis represents supply quantity and the vertical axis represents product pricing. Given that there is a direct correlation between product price and amount delivered, the supply curve is depicted as a slope sloping upward from left to right. Certain ceteris paribus (other things being equal) requirements must hold true for this relationship to exist. The quantity of sellers in the market, the level of technology, the cost of manufacturing, the seller's price expectations, and the costs of comparable goods are a few examples of such factors. The supply curve will alter if any of the circumstances change.
What is equilibrium?
When market supply and demand are in balance, prices become steady. This is known as equilibrium. In general, a surplus of goods or services leads to lower prices, which increases demand, whereas a shortfall or undersupply raises prices, which decreases demand. A state of equilibrium is produced by the influence of supply and demand balancing one another.
The price at which the supply and demand of the commodity are balanced. The market is said to be in an equilibrium when a major index goes through a period of consolidation or sideways movement, indicating that the forces of supply and demand are essentially equal.
Prices, according to economists, frequently oscillate near their equilibrium levels. Market forces will encourage sellers to enter and increase production if the price increases excessively. If the price is too cheap, more bidders will place higher bids. Over time, these actions maintain the relative equilibrium level.
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