6. The Equilibrium Price and Quantity

What is the equilibrium price?

• The price where quantity demanded is less than quantity supplied

• The price where quantity demanded is equal to quantity supplied

• The price where quantity demanded is more than quantity supplied

• The price where buyers and sellers do not interact

What happens when the price is above the equilibrium price?

• The market remains stable

• There is a surplus

• There is a shortage

• The quantity demanded exceeds the quantity supplied

What do sellers do when there is a surplus?

• Raise their prices

• Lower their prices

• Stop selling

• Buy more goods

What is the result of a shortage in the market?

• Sellers lower their prices

• The market remains unchanged

• Buyers bid up the price

• Buyers stop buying

What does the 'invisible hand' refer to in a free market?

• Government intervention

• Market forces promoting social good

• Random price changes

• Unpredictable buyer behavior