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The market price of a good is the level at which the wishes of buyers and sellers coincide, so that quantity demanded equals quantity supplied. This price is called the:
Amaximum support price set by the state
Bequilibrium (market-clearing) price
Caverage cost of production for the firm
Dceiling price fixed below the free-market level
Answer & Solution
Correct answer: B. equilibrium (market-clearing) price
1. Equilibrium occurs where the demand and supply curves intersect.
2. At this point quantity demanded equals quantity supplied.
3. The market 'clears' because no excess demand or supply remains.
4. This is the equilibrium or market-clearing price.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit III "Supply", p.10_
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