Question

explain how and why businesses or our government determine demand and supply curve to find equilibrium price and quantity. (must be 150 words or more)

Answer 1

HOW:

Business or the Government use the demand and supply conditions prevailing in the market to find the equilibrium price and quantity. The equilibrium is attained at the intersection of both demand and supply curves. The demand curve shows the quantity demanded by the consumers at various prices and the supply curve shows the quantity supplied by the producers at various prices. Equilibrium is attained when the quantity demanded by the consumers is exactly equal to the quantity supplied by the producers. This point is achieved by drawing the demand and supply curve for different prices and quantities.

WHY:

The point of intersection between demand and supply has a specific meaning. The equilibrium signifies the mutual desires of both producers and consumers. Both are willing to trade in the market at this price and quantity and both are better - off. Also, at this point, there is no surplus or shortage that occur in the market. Businesses, therefore, let the market decide the equilibrium on its own as it is in the best interest for both consumers and producers.