The equilibrium price clears the market; it is the price at which _________?

A. Everything is sold
B. Buyers spend all their money
C. Excess demand is zero
D. None of the above

Correct Answer:

Option C – Excess demand is zero

Explanation

Equilibrium price is the price where the demand for a product or a service is equal to the supply of the product or service. At equilibrium, both consumers and producers are satisfied, thereby keeping the price of the product or the service stable.