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JAMB Economics 1987 Question 16

Question 16

Price Determination

In the operation of market forces, the market is in equilibrium at the point where

  1. A.demand and supply curves intersect in more than one point provided the market is cleared
  2. B.the excess in the market can be conveniently stored
  3. C.excess demand is negative
  4. D.demand and supply curves intersect.
Show the answer and explanation

Answer: D (demand and supply curves intersect.)

Explanation

Equilibrium is where quantity demanded equals quantity supplied, i.e. where the demand and supply curves cross.