The equilibrium price and quantity of any good or service are established by
A) only consumers.
B) only firms.
C) government regulations.
D) both consumers and firms.
E) custom and tradition.

Question

Quizplus · Accepted Answer

The equilibrium price and quantity are established through the interaction of both consumers and firms in the market. Consumers determine the demand for the good or service while firms provide the supply. The market then finds the equilibrium price and quantity where the quantity demanded equals the quantity supplied. Government regulations, custom, and tradition can all influence the market, but they do not solely determine the equilibrium price and quantity.

The Equilibrium Price and Quantity of Any Good or Service