What is the equilibrium price?
A)The price at which there is no surplus,but there may be a shortage.
B)The price at which there is no shortage,but there may be a surplus.
C)The price at which everyone is able to buy the quantities they desire.
D)The price at which the quantity demanded equals the quantity supplied.
E)The price that both buyers and sellers agree is fair.

Question

Quizplus · Accepted Answer

Equilibrium price is the price at which the quantity demanded equals the quantity supplied. At this price, there is neither a shortage nor a surplus in the market. Therefore, option D is the correct answer. Option A and B are incorrect because surplus or shortage will exist if the price is not at equilibrium. Option C is incorrect because everyone being able to buy the quantity they desire is not necessarily at the equilibrium price. Option E is incorrect because the equilibrium price may not necessarily be fair to both buyers and sellers as it is determined solely by the interaction of supply and demand.

What Is the Equilibrium Price