The price where consumers are willing and able to buy all that the producers are willing and able to supply to the market is called the:

The price where consumers are willing and able to buy all that the producers are willing and able to supply to the market is called the:

• A. Equilibrium price
• B. Price floor
• C. Price ceiling
• D. Market price

Answer: (A)

The key idea is the market-clearing point where supply and demand meet. The price at which consumers are willing and able to buy exactly what producers are willing and able to supply is the equilibrium price. At this price, the quantity demanded equals the quantity supplied, so the market clears with no inherent pressure for prices to move up or down. If the price were higher, a surplus would occur; if lower, a shortage would arise. The other terms describe interventions or the actual market price at a moment in time, but the defining feature here is that balance between buyers and sellers.

The key idea is the market-clearing point where supply and demand meet. The price at which consumers are willing and able to buy exactly what producers are willing and able to supply is the equilibrium price. At this price, the quantity demanded equals the quantity supplied, so the market clears with no inherent pressure for prices to move up or down. If the price were higher, a surplus would occur; if lower, a shortage would arise. The other terms describe interventions or the actual market price at a moment in time, but the defining feature here is that balance between buyers and sellers.