Chapter 4: Problem 3

At equilibrium price, quantity demanded is ( \(\mathrm{OB})\) a) greater than quantity supplied b) cqual to quantity supplicd c) smaller than quantity supplied

Short Answer

Expert verified

At the equilibrium price, quantity demanded (OB) is equal to the quantity supplied. This is because the equilibrium point is where the supply and demand curves intersect, indicating a stable market with no shortages or surpluses. Thus, the correct answer is b) equal to quantity supplied.

Step by step solution

Understanding the basic concepts of supply and demand

Supply and demand are two fundamental concepts in economics. Demand represents consumers' willingness and ability to purchase goods at various prices, while supply represents the quantity of goods that producers are willing and able to produce at different prices. The interaction between supply and demand determines the equilibrium price and quantity of goods in a market.

Graphing supply and demand curves

To understand the relationship between quantity demanded and quantity supplied at the equilibrium price, it's crucial to visualize these concepts on a graph. On the vertical axis, plot the price (P), and on the horizontal axis, plot the quantity (Q). Draw a downward-sloping demand curve (D) and an upward-sloping supply curve (S) with price on the y-axis and quantity on the x-axis.

Locating the equilibrium point

The equilibrium point in a market is the point where the supply and demand curves intersect, indicating the price at which the quantity demanded equals the quantity supplied. Locate the equilibrium point (E) on the graph by finding the intersection of the supply and demand curves.

Analyzing the equilibrium point

At the equilibrium point (E), the quantity demanded (OB) is equal to the quantity supplied, which indicates that the market is in a stable state and there are no shortages or surpluses of goods. Therefore, at the equilibrium price (P), the quantity demanded and supplied are the same. As a result, we can conclude that the correct answer is: b) equal to quantity supplied

Unlock Step-by-Step Solutions & Ace Your Exams!

Full Textbook Solutions
Get detailed explanations and key concepts
Unlimited Al creation
Al flashcards, explanations, exams and more...
Ads-free access
To over 500 millions flashcards
Money-back guarantee
We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!