Optimal Price Level
Definition
The optimal price level refers to the point at which the quantity demanded and quantity supplied in a market are equal, resulting in an efficient allocation of resources.
Analogy
Imagine a seesaw with demand on one side and supply on the other. The optimal price level is like the balance point where both sides are perfectly aligned, ensuring that neither buyers nor sellers have an advantage.
Related terms
Demand Curve: A graphical representation of the relationship between the price of a good or service and the quantity demanded by consumers.
Supply Curve: A graphical representation of the relationship between the price of a good or service and the quantity supplied by producers.
Equilibrium Price: The price at which quantity demanded equals quantity supplied in a market, resulting in market stability.
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