Which of the following scenarios is closest to market equilibrium, where there is zero surplus or shortfall?

• A. Quantity demanded is greater than quantity supplied at the current price.
• B. Quantity demanded equals quantity supplied at the current price.
• C. Quantity supplied is greater than quantity demanded at the current price.
• D. Both quantity demanded and quantity supplied are zero at the current price.

Answer: (B)

Verified step by step guidance

1. Understand the concept of market equilibrium: it occurs when the quantity demanded by consumers equals the quantity supplied by producers at a given price, resulting in no surplus or shortage.
2. Analyze the scenario where quantity demanded is greater than quantity supplied: this indicates a shortage, meaning the market is not in equilibrium.
3. Analyze the scenario where quantity supplied is greater than quantity demanded: this indicates a surplus, meaning the market is not in equilibrium.
4. Consider the scenario where both quantity demanded and quantity supplied are zero: while quantities are equal, this typically means no market activity, which is not a practical equilibrium for most markets.
5. Identify that the scenario where quantity demanded equals quantity supplied at the current price best represents market equilibrium, as it implies no excess supply or demand.