Question

Draw the market equilibrium.

Hint:

Market equilibrium ensures that there is no pressure to change the price, as supply and demand are balanced.

Answer 1

Market equilibrium occurs at the point where the quantity demanded by consumers equals the quantity supplied by producers. This point is determined by the intersection of the demand and supply curves. At this point, the market clears, and there is neither a shortage nor a surplus of goods. Below is a diagram showing the market equilibrium:
Step 1: Demand and Supply Curves.
The demand curve slopes downward, showing the inverse relationship between price and quantity demanded. The supply curve slopes upward, indicating that as prices rise, producers are willing to supply more goods. The equilibrium price is the price at which the quantity demanded equals the quantity supplied.

Step 2: Equilibrium Price and Quantity.
At the point where the demand and supply curves intersect, the market reaches equilibrium. The price at this intersection is the equilibrium price, and the quantity is the equilibrium quantity. If the price is above the equilibrium price, there will be a surplus of goods, and if the price is below the equilibrium price, there will be a shortage.