What is the equilibrium price?

The equilibrium price is defined as the price at which the quantity of a good or service that consumers are willing to purchase (demand) is equal to the quantity that producers are willing to sell (supply). At this point, the market is in balance; there are no excess surpluses or shortages of products. It is crucial for maintaining stable markets and is influenced by various factors, including changes in consumer preferences and production costs.

The other options describe different market situations that do not represent equilibrium. For example, if demand exceeds supply, it leads to a shortage, driving the price upwards. If supply equals price, it does not accurately frame the relationship between supply and demand, as the focus should be on quantity rather than price directly. Lastly, suggesting that the price is determined solely by producers ignores the critical role that consumer demand plays in establishing market prices. Understanding equilibrium price is essential in commercial practice, as it provides insight into market dynamics and pricing strategies.