Multiple Choice
In a competitive market, the point where the supply and demand curves intersect and the market price is determined is called the:
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3. The Market Forces of Supply and Demand
Market Equilibrium
Multiple Choice
In a competitive market, the point at which quantity supplied equals quantity demanded is called the:
A
Price ceiling
B
Market equilibrium (equilibrium price and quantity)
C
Marginal cost
D
Consumer surplus
Verified step by step guidance1
Understand the key terms: 'quantity supplied' is the amount producers are willing to sell at a given price, and 'quantity demanded' is the amount consumers want to buy at that price.
Recognize that the point where quantity supplied equals quantity demanded is where the market clears, meaning there is no surplus or shortage.
Recall that this point is known as the 'market equilibrium,' which determines the equilibrium price and equilibrium quantity in a competitive market.
Differentiate this from other terms: a 'price ceiling' is a government-imposed maximum price, 'marginal cost' is the cost of producing one more unit, and 'consumer surplus' is the difference between what consumers are willing to pay and what they actually pay.
Conclude that the correct term for the point where quantity supplied equals quantity demanded is 'market equilibrium.'
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