Varying prices to achieve market equilibrium

Steps:

• Fixed supply curve intersects each demand curve (D1 to D4) at distinct equilibrium points.
• D1 intersects at lowest price P1; D2 at P2; D3 and D4 at higher prices up to P3.
• Market mechanism requires price equaling marginal cost (supply) and willingness to pay (demand) each day.
• Owner must adjust price daily to clear market and allocate all spaces efficiently.

Why D is correct:

• Varying between P1 and P3 sets equilibrium price for each demand curve, ensuring spaces allocated where demand equals supply per economic theory.

Why the others are wrong:

• A: Fixed at P1 causes shortages on D3/D4 days as demand exceeds supply.
• B: Fixed at P2 underprices D1 (excess supply) and overprices D4 insufficiently.
• C: Limits to P1-P2, failing to reach P3 equilibrium for D4 and causing shortages.

Final answer: D