Multiple Choice
When prices drop below the point where supply and demand meet (the equilibrium price), it results in:
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3. The Market Forces of Supply and Demand
Market Equilibrium
Multiple Choice
On a supply and demand graph, equilibrium is the point where:
A
the quantity supplied equals the quantity demanded
B
the quantity demanded is zero
C
the price is at its maximum
D
the supply curve is above the demand curve
Verified step by step guidance1
Understand that the equilibrium point in a supply and demand graph is where the market clears, meaning there is no excess supply or demand.
Recall that the supply curve shows the relationship between price and quantity supplied, while the demand curve shows the relationship between price and quantity demanded.
Identify that equilibrium occurs where the quantity supplied equals the quantity demanded, which is the intersection point of the supply and demand curves.
Note that at this point, the market price balances the desires of buyers and sellers, so neither surplus nor shortage exists.
Recognize that other options like quantity demanded being zero, price at maximum, or supply curve above demand curve do not describe equilibrium conditions.
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