The point where supply and demand meet and prices are set is called:

• A. Consumer surplus
• B. Marginal cost
• C. Price ceiling
• D. Market equilibrium

Answer: (D)

Verified step by step guidance

1. Understand the concept of supply and demand curves: The demand curve shows the quantity of a good consumers are willing to buy at different prices, while the supply curve shows the quantity producers are willing to sell at different prices.
2. Identify the point where the supply curve and demand curve intersect. This intersection represents the price and quantity at which the quantity demanded equals the quantity supplied.
3. Recognize that this intersection point is called the market equilibrium, where the market clears without excess supply or demand.
4. Note that consumer surplus refers to the difference between what consumers are willing to pay and what they actually pay, which is different from the equilibrium point.
5. Understand that marginal cost is the cost of producing one additional unit, and price ceiling is a government-imposed limit on how high a price can be charged, both distinct from the equilibrium concept.