Price pf shows equilibrium and price p*

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Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Market Equilibrium

Question:

Price p_f shows equilibrium and price p* shows excess demand?

Options:

True

False

Partially true

Can’t say

Correct Answer:

False

Explanation:

The correct answer is option 2: False

It is actually reverse. Price p_f shows situation of excess supply and equilibrium exists at price p*.