Where a market price comes from

In the picture

1. 1Demand line: buyers want less as the price goes up
2. 2Supply line: sellers offer more as the price goes up
3. 3Equilibrium point: where demand and supply meet
4. 4Dotted guides: they read off the equilibrium price and quantity on the axes

Examples

• Apples at a market: if the price is too high, crates stay unsold, so the seller lowers it.
• Concert tickets: if they sell out in minutes, the price is too low and tends to rise.

Quiz: Where a market price comes from (Age 15)

1. 1

   In a market, what do sellers tend to do when the price of a product goes up?

   • They offer more of it
   • They offer less of it
   • They offer the same amount, whatever the price
2. 2

   Where does a market price settle?

   • At the price where the amount buyers want equals the amount sellers offer
   • At the highest price any buyer would pay
   • At the lowest price any seller would accept
3. 3

   What do buyers tend to do when the price of a product goes down?

   • They want the same amount, whatever the price
   • They want more of it
   • They want less of it

The answers, each with its explanation, are in the app. This quiz is free there while the lesson is in the free week.