The equilibrium price where the quantity demanded equals the quantity supplied is known as the:

• A. marginal cost
• B. price ceiling
• C. market-clearing price
• D. price floor

Answer: (C)

Verified step by step guidance

1. Understand the concept of equilibrium price: It is the price at which the quantity of a good demanded by consumers equals the quantity supplied by producers.
2. Recall that 'marginal cost' refers to the additional cost of producing one more unit of a good, which is different from the equilibrium price.
3. Recognize that a 'price ceiling' is a government-imposed maximum price, set below the equilibrium price to make goods more affordable, which can cause shortages.
4. Know that a 'price floor' is a government-imposed minimum price, set above the equilibrium price to protect producers, which can cause surpluses.
5. Conclude that the term describing the price where quantity demanded equals quantity supplied without external intervention is the 'market-clearing price', also known as the equilibrium price.