In the context of supply and demand, what is the equilibrium level of output?

• A. The quantity at which the quantity supplied equals the quantity demanded
• B. The quantity at which total revenue is maximized
• C. The maximum quantity that producers are willing to supply
• D. The minimum quantity that consumers are willing to purchase

Answer: (A)

Verified step by step guidance

1. Understand the concept of equilibrium in supply and demand: it occurs where the market clears, meaning the amount producers want to sell equals the amount consumers want to buy.
2. Identify the quantity supplied (Qs) and quantity demanded (Qd) functions or curves, which show how much producers are willing to supply and consumers are willing to buy at different prices.
3. Set the quantity supplied equal to the quantity demanded to find the equilibrium condition: \(Q_s = Q_d\).
4. Solve the equation \(Q_s = Q_d\) for the output level (quantity) to find the equilibrium quantity, which is the output level where the market is balanced.
5. Recognize that this equilibrium quantity is the point where there is no surplus or shortage in the market, meaning the quantity supplied equals the quantity demanded.