After conducting an inventory,a music retailer determines that higher-priced CDs are still sitting on the shelves.To move product off the shelves,management decides to price CDs at the point at which the demand curve and the supply curve intersect.This price is known as the ________.
A) parity point
B) equilibrium price
C) parity price
D) breakeven point

Question

Quizplus · Accepted Answer

The point at which the demand curve and the supply curve intersect is called the equilibrium point or equilibrium price. It is where the quantity of CDs that customers are willing to buy (demand) matches the quantity that the retailer is willing to sell (supply) at a particular price. Pricing CDs at the equilibrium price will ensure that the retailer sells all of its inventory and maximizes its revenue. The other options, parity point, parity price, and breakeven point, do not accurately describe the concept of pricing at the point of intersection between the demand and supply curves.

After Conducting an Inventory,a Music Retailer Determines That Higher-Priced CDs