The equilibrium or market clearing price occurs at the point at which
A) quantity demanded equals quantity supplied.
B) the supply curve intersects the horizontal axis.
C) the demand curve intersects the vertical axis.
D) there is a shortage of the desired good.

Question

Quizplus · Accepted Answer

The equilibrium or market clearing price occurs at the point where quantity demanded by buyers equals the quantity supplied by sellers. At this point, there is no surplus or shortage of the good in the market. Therefore, option A is the correct answer. Option B and C are incorrect as they do not capture the essence of equilibrium price determination. Option D is also incorrect as a shortage implies that the price is below the equilibrium price.

The Equilibrium or Market Clearing Price Occurs at the Point