Which of the graphs below correctly illustrates a market in equilibrium?
Choose 1 answer:
(B)
(c)
(D)
(C)

Question

Accepted Answer

∻Solution by Steps∻ ‖ step 1 ⋮ Identify the characteristics of market equilibrium: Market equilibrium occurs where the quantity supplied equals the quantity demanded. This is represented graphically by the point where the supply curve (S) intersects the demand curve (D). ‖ ‖ step 2 ⋮ Analyze the given graphs: We need to find the graph where the supply and demand curves intersect, and this intersection represents the equilibrium price (P*) and quantity (Q*). ‖ ‖ step 3 ⋮ Eliminate incorrect options: Graphs that show the supply curve as a vertical line (Graphs D, E, and F) indicate a perfectly inelastic supply, which is a special case and not representative of a typical market equilibrium. Therefore, we can eliminate Graphs D, E, and F. ‖ ‖ step 4 ⋮ Compare the remaining graphs: Graph A shows a downward-sloping demand curve intersecting an upward-sloping supply curve at a point marked with an 'X'. This point is where the market is in equilibrium. Graph B shows a similar intersection but at a lower quantity and higher price, which could indicate a surplus or shortage depending on the context. Graph C shows an intersection at a higher quantity and lower price, which could also indicate a surplus or shortage. ‖ ‖ step 5 ⋮ Select the correct graph: Since Graph A shows the typical intersection of supply and demand curves without any indication of surplus or shortage, it is the correct representation of a market in equilibrium. ‖ ∻Answer∻ ***A*** ∻Key Concept∻ ⚹Market Equilibrium⚹ ∻Explanation∻ ⚹Market equilibrium is represented by the intersection of the supply and demand curves, indicating the equilibrium price and quantity where the quantity supplied equals the quantity demanded.⚹◊What statistical methods can be used to analyze equilibrium in market graphs?⍭ Generate me a similar question◊

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