4.3 Market Equilibrium: Bringing Demand and Supply Together

-Figure 4.2 illustrates the supply and demand for t-shirts. If the actual price of t-shirts is $10, we would expect that

Question

4.3 Market Equilibrium: Bringing Demand and Supply Together
 
-Figure 4.2 illustrates the supply and demand for t-shirts. If the actual price of t-shirts is $10, we would expect that

Quizplus · Accepted Answer

When the actual price of t-shirts is $10, the quantity demanded and the quantity supplied are equal, which means the market is in equilibrium. Therefore, there will be no change in the price. Option A and B are incorrect because they suggest that either demand or supply will change to reach equilibrium, which is not the case in this scenario. Option C is also incorrect because price is already at the level where quantity demanded equals quantity supplied, so there is no need for further price adjustments.