Why would a free market never operate at a quantity greater than the equilibrium quantity? Hint: What would be required for a transaction to occur at that quantity?

A free market is an economic system where prices for goods and services are determined by the open market and buyers and sellers, with little or no government intervention. In a free market, the forces of supply and demand dictate the market price and quantity of goods and services offered.

In the context of a free market, the equilibrium quantity is the level of quantity offered by sellers and demanded by the buyers at a specific price, known as the equilibrium price. At this point, the quantity supplied is equal to the quantity demanded, and there is no surplus or shortage in the market.

For a transaction to occur in a free market, a buyer must be willing to pay the offered price for a good or service, and a seller must be willing to sell at that price. This is referred to as a mutually agreeable price, which eventually results in a market equilibrium.

Now, let's consider a scenario where the quantity in the market is greater than the equilibrium quantity. In this case, there would be a surplus of goods available, as the quantity supplied would be greater than the quantity demanded at that particular price. For a transaction to occur at that higher quantity, the sellers would have to lower their prices to persuade buyers to purchase the excess goods. In the process of lowering prices, the quantity demanded would increase, and the excess supply would be reduced. However, if the market were operating at a quantity greater than the equilibrium quantity without clearing the surplus, it would mean that buyers would be willing to purchase the excess goods without a price reduction from the sellers. This contradicts the notion of a free market, where buyers and sellers make choices based on their preferences and willingness to pay while aiming to maximize their individual utility. Simply put, a free market cannot operate at a quantity greater than the equilibrium quantity because it would require buyers to purchase goods at a price higher than they are willing to pay, which is not in line with the principles of a free market. Thus, the free market will always strive to reach an equilibrium quantity where the quantity supplied equals the quantity demanded, and both buyers and sellers are satisfied with the agreed-upon price.