Question

1. Mention the equilibrium point and equilibrium price in above diagram. (2m)
2. Explain the concept of equilibrium price with the help of above diagram (2m)

Answer 1

1. The equilibrium point in the given diagram is point E i.e. the point at which the demand & supply curves intersect. . The equilibrium price in the given diagram is ₹ 300.
2. Equilibrium price is the price at which quantity demanded is equal to quantity supplied.

1. In the given diagram, Y-axis represents the price whereas X-axis represents quantity demanded and supplied. 
2. The demand curve DD is a downward sloping curve indicating an inverse relationship between price & quantity demanded.
3. The supply curve SS is an upward sloping curve indicating a direct relationship between price and quantity supplied
4. The curves DD and SS intersect each other at point E which is the ‘equilibrium point’.
5. Therefore, ₹ 300 is the equilibrium price and 3000 kgs is the equilibrium quantity.