1.

Define equilibrium price and quantity.

Answer»

Equilibrium price is the price at which equilibrium is reached in the market.

The equilibrium quantity is defined as the quantity which is bought and sold at equilibrium price. Therefore, price and quantity will be at equilibrium when

Qd (p*) = qs (p*)

p* denotes the equilibrium price and Qd (p*) and qs (p*) denote the market demand and market supply, respectively.



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