Market Equilibrium

-Assume that column A and column C are the initial demand and supply curves.The market would achieve an equilibrium at a price of
A) $20.
B) $30.
C) $40.
D) $50.
E) $60.

Question

Market Equilibrium
 
-Assume that column A and column C are the initial demand and supply curves.The market would achieve an equilibrium at a price of
A) $20. 
B) $30. 
C) $40. 
D) $50. 
E) $60.

Quizplus · Accepted Answer

At the price of $40, the quantity demanded and quantity supplied are equal, which is the definition of market equilibrium. At any price lower than $40, the quantity demanded exceeds the quantity supplied, which would lead to a shortage and increase in price. On the other hand, at any price higher than $40, the quantity supplied exceeds the quantity demanded, which would lead to a surplus and decrease in price. Therefore, $40 is the only price where the market reaches equilibrium.

Market Equilibrium -Assume That Column a and Column C Are the Initial