ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Supply and demand curves intersect at the equilibrium price. This is the price at which we would predict the market will operate.

Detailed explanation-2: -Equilibrium price. When a product exchange occurs, the agreed upon price is called an equilibrium price, or a market clearing price. Graphically, this price occurs at the intersection of demand and supply as presented in Image 1. In Image 1, both buyers and sellers are willing to exchange the quantity Q at the price P.

Detailed explanation-3: -Market Equilibrium: Where Supply Meets Demand Equilibrium is the point where demand for a product equals the quantity supplied. This means that there’s no surplus and no shortage of goods. A shortage occurs when demand exceeds supply – in other words, when the price is too low.

Detailed explanation-4: -When there is an effect of balance between supply and demand, the resulting situation is a stable state of equilibrium. Hence we can justify that it is true to say that the intersection of supply and demand curves results in a market equilibrium.

Detailed explanation-5: -True. The equilibrium price is also sometimes called the market-clearing price, because, at this price, everyone in the market has been satisfied: Buyers have bought all they want to buy, and sellers have sold all they want to sell.