Are markets always in equilibrium? Choose the most accurate statement.

• A. No, markets can experience surpluses or shortages before reaching equilibrium.
• B. Markets are only in equilibrium when government intervention occurs.
• C. Markets never reach equilibrium under any circumstances.
• D. Yes, markets are always perfectly balanced with no excess supply or demand.

Answer: (A)

Verified step by step guidance

1. Understand the concept of market equilibrium: it occurs when the quantity demanded equals the quantity supplied at a particular price, resulting in no surplus or shortage.
2. Recognize that markets are dynamic and prices adjust over time. Before reaching equilibrium, markets can experience surpluses (excess supply) or shortages (excess demand).
3. Analyze the given statements: equilibrium does not require government intervention; it can be reached naturally through price adjustments.
4. Eliminate incorrect options: markets are not always perfectly balanced at all times, and it is not true that markets never reach equilibrium.
5. Conclude that the most accurate statement is that markets can experience surpluses or shortages before reaching equilibrium.