Final Answer:
The equilibrium price in this market per shirt is $15, and approximately 5,000 shirts are bought and sold per month.
Step-by-step explanation:
In determining the equilibrium price and quantity, we rely on the intersection of the market demand and supply curves. The equilibrium price is found where the quantity demanded equals the quantity supplied. Given a market demand for shirts at $20 per shirt and a market supply at $10 per shirt, the equilibrium price settles at $15. At this price point, both buyers and sellers find common ground, resulting in the exchange of approximately 5,000 shirts monthly.
To break down the calculation further, let's consider that at $20 per shirt, the quantity demanded is 3,000 shirts, while at $10 per shirt, the quantity supplied is 7,000 shirts. Equilibrium is reached when these two quantities match for $15 per shirt. This balance ensures that neither a surplus nor a shortage exists in the market.
The equilibrium price serves as a crucial indicator of market stability, where buyers and sellers agree on a fair value for the product. In this case, $15 strikes the right balance, leading to a monthly exchange of 5,000 shirts. Understanding equilibrium is fundamental for market participants, as it enables efficient decision-making and resource allocation.