The Point at Which the Supply Curve and the Demand

question 75

Multiple Choice

The point at which the supply curve and the demand curve intersect is called:

• A) equilibrium, because quantity demanded equals quantity supplied so there is no tendency for price to change.
• B) equilibrium, because quantity demanded exceeds quantity supplied so there is a shortage.
• C) equilibrium, because quantity supplied exceeds quantity demanded so there is a surplus.
• D) irrelevant, because real-world prices never reach this point.

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Definitions:

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical.

Barriers to Entry

Obstacles that prevent new competitors from easily entering an industry or area of business.

Monopolistic Competition

A market structure where many companies sell products that are similar but not identical, allowing them to compete on factors other than price.

Imperfect Competition

Imperfect competition describes a market structure where the conditions necessary for perfect competition are not met, leading to firms having some control over market prices.