ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A market-clearing price is the price of a good or service at which quantity supplied is equal to quantity demanded, also called the equilibrium price.

Detailed explanation-2: -MARKETS: Equilibrium is achieved at the price at which quantities demanded and supplied are equal. We can represent a market in equilibrium in a graph by showing the combined price and quantity at which the supply and demand curves intersect.

Detailed explanation-3: -The price at which the quantity demanded equals the quantity supplied is the equilibrium price because at this price the plans of producers and consumers are coordinated and there is no influence on the price to change.

Detailed explanation-4: -How to calculate equilibrium quantity? It can be calculated by solving the demand and supply function (Qa – bP = x + yP). Solving the equation when the supply equals the demand gives an equilibrium price.