Refer to Figure 7-9. What is the equilibrium price in the market depicted?

• A. The highest price shown on the figure
• B. The price at which demand exceeds supply
• C. The price at which quantity demanded equals quantity supplied
• D. The lowest price at which any sales occur

Answer: (C)

Verified step by step guidance

1. Understand that the equilibrium price in a market is the price at which the quantity demanded by consumers equals the quantity supplied by producers.
2. Identify the demand curve and the supply curve on the figure (Figure 7-9) to see how quantity demanded and quantity supplied change with price.
3. Find the point where the demand curve intersects the supply curve; this intersection represents the equilibrium point.
4. At this intersection, note the corresponding price on the vertical axis; this price is the equilibrium price.
5. Confirm that at this price, the quantity demanded equals the quantity supplied, meaning there is no shortage or surplus in the market.