When talking about supply-demand graphs, what is the ruling price?
The ruling price is where the supply and demand curves intersect. This is called the equilibrium point. Over time, the price of a particular product will find it’s way to that equilibrium point. The supply curve is determined by how best a supplier can maximise it’s profits. This level is determined where it’s marginal cost (the cost of pruducing one more unit of that product) matches it’s marginal revenue (the revenue gained by producing one more unit of that product). Also the supply curve will always start above it’s average variable cost point (if variable costs are not being covered a supplier will stop producing). The demand curve is simply determined by how many units of that product can be sold at any given price. If the product is set at too high a price, then supply will be greater than demand causing a surplus. This will force the price of the product down. If the product is set at too low a price, then demand will be greater than supply causing a shortage. This will force t
