What term refers to the price at which the quantity demanded equals the quantity supplied?

• A. Equilibrium price
• B. Market equilibrium
• C. Rationing
• D. Black market

Answer: (A)

The price that clears the market is the equilibrium price. It’s the point where the quantity demanded by buyers exactly matches the quantity supplied by sellers, so there’s no pressure for the price to move. At this price, the market is balanced: buyers who want to buy as much as sellers want to sell. If the price were higher, a surplus would emerge because producers would be willing to sell more than buyers want to buy; if it were lower, a shortage would occur because buyers want to buy more than producers are willing to sell. The other terms refer to the market's state or to illegal trading channels rather than the specific price that balances supply and demand.