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Chapter 4: Problem 3

At equilibrium price, quantity demanded is _____. a) greater than quantity supplied b) equal to quantity supplied c) smaller than quantity supplied

Short Answer

Expert verified
At the equilibrium price, quantity demanded is \(b)\) equal to the quantity supplied.

Step by step solution

01

Understanding Equilibrium Price

Equilibrium price is the price at which the quantity demanded by consumers is equal to the quantity supplied by producers. In other words, it is the price where market forces of demand and supply balance each other, and there is no excess demand or supply.
02

Considering Quantity Demanded at Equilibrium Price

At the equilibrium price, the quantity demanded by consumers exactly matches the quantity that producers are willing to supply. At this point, the market is in equilibrium, and there is neither excess supply nor excess demand.
03

Comparing Quantity Demanded and Quantity Supplied

At the equilibrium price, we need to compare the quantity demanded with the quantity supplied: a) If the quantity demanded is greater than the quantity supplied, then there is an excess demand, and the market is not in equilibrium. b) If the quantity demanded is equal to the quantity supplied, then the market is in equilibrium, and there is neither excess demand nor excess supply. c) If the quantity demanded is smaller than the quantity supplied, then there is an excess supply, and the market is not in equilibrium.
04

Conclusion

Given the definition of equilibrium price and the relationship between quantity demanded and quantity supplied at this price, we can conclude that at the equilibrium price, the quantity demanded is \(b)\) equal to the quantity supplied.

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Most popular questions from this chapter

If the price system is allowed to function without interference and a shortage occurs, quantity demanded will ______ and quantity supplied will _____ as the price rises to its equilibrium level. a) rise, rise b) fall, fall c) rise, fall d) fall, rise

As price rises, ______. a) quantity demanded and quantity supplied both rise b) quantity demanded and quantity supplied both fall c) quantity demanded rises and quantity supplied falls d) quantity demanded falls and quantity supplied rises

Usury laws tend to _____ a) create a shortage of loanable funds b) create a surplus of loanable funds c) make it easier to obtain credit d) have no effect on the amount of loanable funds available

If the government set a price ceiling of 25 cents for a loaf of bread, the most likely consequence would be ____. a) a surplus of bread b) no one would go hungry c) most Americans would put on weight d) a shortage of bread

At equilibrium, quantity demanded is ______ equal to quantity supplied. a) sometimes b) always c) never
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