Question 1 Report
Fig. 1 shows demand and supply for reusable water bottles at a school shop. The government has not imposed taxes on this market.
(a) Which price is the equilibrium price in Fig. 1? [1]
(a) Equilibrium price: $5. [1]
The equilibrium price is where the demand and supply curves intersect, because quantity demanded equals quantity supplied at that price. In Fig. 1, their intersection is at $5. The statement that there are no taxes means no tax wedge needs to be considered.
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