Question

In the context of a competitive market with linear downward-sloping demand curves and constant marginal and average costs, where would the equilibrium price most likely be located?

A) At the highest point of the demand curve
B) At the intersection of the demand and supply curves
C) At the point of maximum marginal cost
D) At the point of minimum average cost

Answer 1

The equilibrium price is most likely located at the intersection of the demand and supply curves in a competitive market.

Step-by-step explanation:

In a competitive market with linear downward-sloping demand curves and constant marginal and average costs, the equilibrium price is most likely located at the intersection of the demand and supply curves. This is where the quantity demanded by consumers is equal to the quantity supplied by producers, resulting in a market equilibrium.

In this scenario, the equilibrium price reflects the overall market conditions and the interaction between buyers and sellers.