Suppose the New York City housing market is in equilibrium. Which of the following statements is true?

• A. Sellers can always raise prices without losing tenants.
• B. There is a persistent shortage of apartments at the current market price.
• C. The quantity of apartments demanded equals the quantity supplied at the prevailing market price.
• D. Buyers are unable to find any apartments at the current market price.

Answer: (C)

Verified step by step guidance

1. Understand the concept of market equilibrium: In microeconomics, equilibrium occurs when the quantity demanded by buyers equals the quantity supplied by sellers at a particular price.
2. Analyze the meaning of each statement in the context of equilibrium: For example, if sellers could always raise prices without losing tenants, it would imply demand is perfectly inelastic, which is unlikely in a typical housing market.
3. Recognize that a persistent shortage means quantity demanded exceeds quantity supplied, which contradicts the definition of equilibrium where supply equals demand.
4. Note that buyers being unable to find any apartments at the current price suggests excess demand or a shortage, again contradicting equilibrium conditions.
5. Conclude that the true statement in equilibrium is that the quantity of apartments demanded equals the quantity supplied at the prevailing market price, reflecting a balanced market with no shortages or surpluses.