Use the following to answer question(s): Market Failure 1

-(Exhibit: Market Failure 1) A competitive market, free of market failures, will achieve an equilibrium price _______ and an equilibrium quantity _______ .
A) 0A; 0E
B) 0A; 0G
C) 0B; 0F
D) 0C; 0E

Question

Use the following to answer question(s): Market Failure 1
 
-(Exhibit: Market Failure 1) A competitive market, free of market failures, will achieve an equilibrium price _______ and an equilibrium quantity _______ .
A) 0A; 0E 
B) 0A; 0G 
C) 0B; 0F 
D) 0C; 0E

Quizplus · Accepted Answer

In a competitive market, free of market failures, the equilibrium price is determined where the supply curve (S) intersects the demand curve (D) at point E and the equilibrium quantity is QF. Looking at the exhibit, we can see that option C is the correct answer. At point B, the supply curve intersects the demand curve at point F, which is not the equilibrium point. Therefore, option C, where the supply curve intersects the demand curve at point E and the equilibrium quantity is QF, is the correct answer.

Use the Following to Answer Question(s): Market Failure 1