Refer to Figure 10-3. What is the equilibrium price in this market?

• A. The highest price at which the good is sold
• B. The price at which demand exceeds supply
• C. The price at which quantity demanded equals quantity supplied
• D. The lowest price at which the good is sold

Answer: (C)

Verified step by step guidance

1. Understand the concept of market equilibrium: It occurs at the price where the quantity demanded by consumers equals the quantity supplied by producers.
2. Identify the demand curve and the supply curve on the graph (Figure 10-3). The demand curve typically slopes downward, indicating that as price decreases, quantity demanded increases.
3. The supply curve typically slopes upward, indicating that as price increases, quantity supplied increases.
4. Find the point on the graph where the demand curve and supply curve intersect. This intersection represents the equilibrium price and quantity.
5. The equilibrium price is the price corresponding to this intersection point, where quantity demanded equals quantity supplied.