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What condition defines market equilibrium in the demand and supply model?
AQuantity demanded equals quantity supplied at that price
BPrice is fixed permanently by government regulation
CQuantity demanded always exceeds quantity supplied
DQuantity supplied always exceeds quantity demanded
Answer & Solution
Correct answer: A. Quantity demanded equals quantity supplied at that price
1. Equilibrium is defined purely in terms of quantities, not by any outside rule-setter.
2. It is the price at which the amount consumers want to buy equals the amount producers want to sell.
3. At any other price the two quantities differ, so the market is not in equilibrium there.
4. Options C and D describe a permanent shortage or surplus, which is the opposite of equilibrium.
_Source: OpenStax Principles of Macroeconomics for AP Courses (CC BY 4.0), Ch 3 "Demand and Supply", section 3.1 | Demand, Supply, and Equilibrium in Markets for Goods and Services_
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