Question

What is meant by equilibrium price under perfect competition?

Options

• The price at which demand is greater than supply

• The price at which supply is greater than demand

• The price at which quantity demanded is equal to quantity supplied

• The price fixed only by the government

Answer 1

The price at which quantity demanded is equal to quantity supplied

Explanation:

Equilibrium price is that price at which quantity demanded and quantity supplied are exactly equal, so there is neither excess demand nor excess supply.