In a perfect market, the price of any commodity is determined by the interaction of the forces of demand and supply. By equilibrium price, we mean the unique price level at which the quantity supplied and the quantity demanded are equal. For illustrative purpose, see the schedule below:

Demand and Supply schedule

The graph above illustrates the interaction of demand and supply, and also yield the same conclusion where the equilibrium price (N10) is given by the intersection of the two curves.


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