Equilibrium prices is

Step 1: Analyze the question The question asks for the meaning of "equilibrium price" in economics.

Step 2: Explain the concept "Equilibrium" means a state of balance. In a market, the equilibrium price is the price at which the quantity buyers want to buy (demand) is exactly equal to the quantity sellers want to sell (supply). At this price, the market "clears," so there is no shortage and no surplus.

Step 3: Work through the options

• A. A price which equates demand with supply: This is correct. It is the textbook definition of equilibrium price.
• B. A price where there is excess demand: Excess demand means a shortage. It happens when the price is below equilibrium, so this is wrong.
• C. Where consumers gain much: This is not part of the definition. Consumer gain relates to consumer surplus, not equilibrium itself.
• D. Where producers gain much: This is also wrong. Producer gain relates to producer surplus.
• E. Where supply is more than demand: This is excess supply (a surplus). It happens when the price is above equilibrium, so this is wrong.

Step 4: Answer The correct option is A.

Step 5: Exam tip Remember: Equilibrium = Balance (Qd = Qs).

• Price too high gives a surplus (excess supply).
• Price too low gives a shortage (excess demand).
• Only at equilibrium do the two match. On a graph, it is where the demand and supply curves intersect.