ExpertEasy1 markMultiple Choice
AQA GCSE · Question 01 · How markets work
Which of the following best describes the equilibrium price in a market?
Which of the following best describes the equilibrium price in a market?
Answer options:
A.
Where all consumers are satisfied
B.
Where profit is maximised
C.
Where quantity supplied equals quantity demanded
D.
Where quantity supplied exceeds quantity demanded
How to approach this question
Recall the definition of equilibrium in a market. It is the point where the supply and demand curves intersect. At this intersection, the quantity that producers are willing to supply is exactly equal to the quantity that consumers are willing to buy.
Full Answer
C.Where quantity supplied equals quantity demanded✓ Correct
The correct answer is C. The equilibrium price is the price at which the quantity of a good or service demanded by consumers is equal to the quantity supplied by producers.
Equilibrium price is a fundamental concept in microeconomics. It's the price where the plans of consumers and the plans of producers agree. The quantity consumers want to buy (quantity demanded) is exactly equal to the quantity producers want to sell (quantity supplied). This point is graphically represented by the intersection of the supply and demand curves.
Common mistakes
Students sometimes confuse equilibrium with other concepts like profit maximisation or think that everyone is happy at the equilibrium price. It's simply the point where the market clears.
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