The equilibrium price level and equilibrium output in a market are determined by the:

• A. interaction of market demand and market supply
• B. total production costs of all firms
• C. government-imposed price controls
• D. preferences of individual consumers only

Answer: (A)

Verified step by step guidance

1. Understand that the equilibrium price level and equilibrium output in a market are found where the quantity demanded equals the quantity supplied.
2. Recall that market demand represents the total quantity of a good or service consumers are willing and able to buy at different prices.
3. Recognize that market supply represents the total quantity of a good or service producers are willing and able to sell at different prices.
4. Identify that the interaction of market demand and market supply determines the equilibrium because it balances the desires of consumers and producers.
5. Note that while production costs, government controls, and consumer preferences influence supply and demand, the equilibrium itself is specifically set by the intersection of market demand and market supply curves.