The interaction between buyers and sellers determines the equilibrium price and the:

• A. quantity exchanged in the market
• B. cost of production for firms
• C. level of government intervention
• D. total profit earned by producers

Answer: (A)

Verified step by step guidance

1. Understand that in microeconomics, the equilibrium price is the price at which the quantity demanded by buyers equals the quantity supplied by sellers.
2. Recognize that the interaction between buyers and sellers in a market determines not only the equilibrium price but also the quantity of goods or services exchanged at that price.
3. Recall that the cost of production for firms is determined by their technology and input prices, not directly by the interaction between buyers and sellers.
4. Note that the level of government intervention is an external factor and does not result from the direct interaction between buyers and sellers.
5. Understand that total profit earned by producers depends on costs and revenues, but the immediate outcome of buyer-seller interaction is the equilibrium price and quantity exchanged.