Question

question 11

what occurs at market equilibrium?

• only sellers benefit.
• supply equals demand.
• demand is greater than supply.
• the government sets prices.

Explanation:

Define market equilibrium

Market equilibrium is the state where market forces are balanced. This occurs at the price level where the quantity of a good or service demanded by buyers is exactly equal to the quantity supplied by sellers.

Evaluate the given options

• Only sellers benefit: Incorrect. Both buyers and sellers benefit from trading at the equilibrium price (consumer and producer surplus are generated).
• Supply equals demand: Correct. At equilibrium, the quantity supplied equals the quantity demanded, clearing the market without shortages or surpluses.
• Demand is greater than supply: Incorrect. If demand exceeds supply, there is a shortage, which exerts upward pressure on prices, moving the market away from equilibrium.
• The government sets prices: Incorrect. Market equilibrium is typically reached naturally through the price mechanism in a free market, not through government price controls.

Answer:

• Only sellers benefit.
• Supply equals demand. (Correct answer)
• Demand is greater than supply.
• The government sets prices.