In the context of market equilibrium, what is the term for the price at which quantity supplied equals quantity demanded?

• A. Equilibrium price
• B. Price ceiling
• C. Market clearing quantity
• D. Marginal cost

Answer: (A)

Verified step by step guidance

1. Understand the concept of market equilibrium, which occurs when the quantity of a good or service that consumers are willing and able to buy equals the quantity that producers are willing and able to sell.
2. Identify that the price at which this balance happens is called the equilibrium price, as it 'clears' the market by equating supply and demand.
3. Recognize that a price ceiling is a government-imposed limit below the equilibrium price, which can cause shortages, so it is not the equilibrium price itself.
4. Note that market clearing quantity refers to the quantity exchanged at the equilibrium price, not the price itself.
5. Marginal cost is the cost of producing one additional unit and is unrelated to the price where supply equals demand.