Price Determination Definition
Equilibrium price arises when all the commodities in the market will be cleared at that price.
Equilibrium quantity arises when what is being brought to market by the seller is being bought by the consumers at equilibrium cost.
Price per Kg ($)
Quantity demanded
Quantity supplied
0.80
3
1
1.00
2.5
1.5
1.20
2
1.50
1.80
Note: Pe, Qe = equilibrium as market is cleared
D < S = surplus
D1 > S1 = shortage
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