Which of the following best describes what occurs during market equilibrium?

• A. There is no tendency for the market price to change.
• B. The quantity supplied exceeds the quantity demanded.
• C. The quantity supplied equals the quantity demanded.
• D. Buyers and sellers are unable to agree on a price.

Answer: (C)

Verified step by step guidance

1. Understand the concept of market equilibrium: it is the point where the quantity of a good or service demanded by buyers equals the quantity supplied by sellers.
2. Recall that at equilibrium, the market price is stable because there is no excess supply or excess demand to push the price up or down.
3. Express this condition mathematically as \(Q_s = Q_d\), where \(Q_s\) is quantity supplied and \(Q_d\) is quantity demanded.
4. Recognize that if quantity supplied exceeds quantity demanded, there is a surplus, causing downward pressure on price, so this is not equilibrium.
5. Similarly, if quantity demanded exceeds quantity supplied, there is a shortage, causing upward pressure on price, so this is also not equilibrium.