Question

Please refer to the graph to answer the question. Without price controls, this market will adjust until it reaches a price of _____ per pair of shoes. This is the price at which producers supply the same amount that consumers demand.

a) $50
b) $35

Answer 1

The point E is known as the equilibrium. This is the point that the market wants to be at. I would say that the answer would be $35

Answer 2

The market, only under the forces of supply and demand, adjusts to an equilibrium point (the point where supply and demand is equal).

Graphically, it is the intersection point of the Demand Curve and the Supply Curve.

From the graph shown, E is the Equilibrium point and the corresponding y-axis value (PRICE) is $35.

So, "Without price controls, this market will adjust until it reaches a price of $35 per pair of shoes"

Answer choice B is correct.

ANSWER: B