Figure 7-23
-Refer to Figure 7-23.The equilibrium price is
A)P1.
B)P2.
C)P3.
D)P4.

Question

Figure 7-23 
-Refer to Figure 7-23.The equilibrium price is
A)P1. 
B)P2. 
C)P3. 
D)P4.

Quizplus · Accepted Answer

The equilibrium price is where the demand curve intersects with the supply curve. In this case, it is at point P2. At P1, there is excess supply and the price will eventually have to decrease to reach equilibrium. At P3 and P4, there is excess demand and the price will eventually have to increase. Therefore, P2 is the only equilibrium price.

Figure 7-23 -Refer to Figure 7-23.The Equilibrium Price Is