500

460

420

640

680

700

720

TABLE 3.3 Price, Quantity Demanded, and Quantity Supplied

Remember this: When two lines on a diagram cross, this intersection usually means something. The point

where the supply curve (S) and the demand curve (D) cross, designated by point E in Figure 3.4, is called the

equilibrium. The equilibrium price is the only price where the plans of consumers and the plans of producers

agree—that is, where the amount of the product consumers want to buy (quantity demanded) is equal to the

amount producers want to sell (quantity supplied). Economists call this common quantity the equilibrium
quantity. At any other price, the quantity demanded does not equal the quantity supplied, so the market is not

in equilibrium at that price.

In Figure 3.4, the equilibrium price is $1.40 per gallon of gasoline and the equilibrium quantity is 600 million

gallons. If you had only the demand and supply schedules, and not the graph, you could find the equilibrium by
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