Figure 3-2
Given the supply and demand conditions illustrated in Figure 3-2, the equilibrium price of steak is

Question

Figure 3-2 
Given the supply and demand conditions illustrated in Figure 3-2, the equilibrium price of steak is

Quizplus · Accepted Answer

The equilibrium price is where the quantity demanded equals the quantity supplied, and in this case it is at a price of $6 per pound. At any price lower than equilibrium, there will be excess demand (shortage) and buyers will compete with each other, driving the price up. At any price higher than equilibrium, there will be excess supply (surplus) and sellers will lower their prices to attract buyers. Therefore, $6 is the only price at which the market will be in equilibrium.

Figure 3-2 Given the Supply and Demand Conditions Illustrated in Figure 3-2