Question

In the table below that will be equilibrium market price?

Price (Rs.)	Demand (tonnes per annum)	Supply (tonnes per annum)
1 2 3 4 5 6 7 8	1,000 900 800 700 600 500 400 300	400 500 600 700 800 900 1,000 1,100

• A. Rs. 2
• B. Rs. 3
• C. Rs. 4
• D. Rs. 5

Answer 1

The correct option is C Rs. 4

Equilibrium market price is a point where the demand equals the supply for a particular commodity. Hence, in the given illustration, demand (700) is equal to supply (700) at Rs.4. Hence, it is equilibrium market price.