What is achieved when supply meets demand?
(1 point)
Responses
relative price
relative price
market price
market price
equilibrium price
equilibrium price
quantity price
quantity price
The correct answer is: equilibrium price
When supply meets demand, the result achieved is called the equilibrium price. This is the price at which the quantity of goods or services supplied by producers matches the quantity demanded by consumers in the market. It represents the point where buyers and sellers agree on a fair and agreed-upon price, and it helps to balance the market by avoiding excess supply or excess demand.
When supply meets demand, the result is the establishment of an equilibrium in the market. This equilibrium is characterized by an equilibrium price and quantity. Here's how to understand the relationship between supply and demand:
Supply refers to the availability and willingness of producers to offer goods or services for sale at different prices. It is represented by an upward-sloping supply curve, meaning that as prices increase, suppliers are willing to offer more of their goods/services.
Demand, on the other hand, represents the desire and ability of consumers to purchase a product or service at different prices. Demand is shown by a downward-sloping demand curve, indicating that as prices decrease, consumers are willing to buy more.
When supply meets demand, the market reaches a point where the quantity of goods or services that producers are willing to supply matches the quantity that consumers are willing to purchase. At this point, the market is said to be in equilibrium.
The equilibrium price is the market-clearing price, where the quantity demanded is equal to the quantity supplied. It is represented by the intersection of the supply and demand curves. This price reflects the balance between consumer demand and producer supply.
The equilibrium quantity is the quantity of goods or services bought and sold at the equilibrium price. It represents the quantity at which supply and demand are in perfect balance.
So, when supply meets demand, the achievement is the establishment of both an equilibrium price and an equilibrium quantity in the market.