In the context of market equilibrium, what is the point called where the supply and demand curves intersect?

• A. Price ceiling
• B. Equilibrium point
• C. Surplus point
• D. Shortage point

Answer: (B)

Verified step by step guidance

1. Understand that the supply curve represents the relationship between the price of a good and the quantity producers are willing to supply, while the demand curve represents the relationship between the price and the quantity consumers are willing to buy.
2. Recognize that the point where these two curves intersect is significant because it indicates a price at which the quantity supplied equals the quantity demanded.
3. This intersection point is called the equilibrium point, where the market is in balance with no tendency for price to change, assuming other factors remain constant.
4. At the equilibrium point, there is neither a surplus (excess supply) nor a shortage (excess demand) in the market.
5. Therefore, the equilibrium point is the price and quantity combination where the intentions of buyers and sellers match perfectly.