In the context of market equilibrium, what is the relationship between quantity demanded and quantity supplied?

• A. Quantity supplied is greater than quantity demanded.
• B. Quantity demanded is greater than quantity supplied.
• C. Quantity demanded and quantity supplied are unrelated.
• D. Quantity demanded equals quantity supplied.

Answer: (D)

Verified step by step guidance

1. Understand the concept of market equilibrium: it is the point where the quantity of a good or service that consumers are willing and able to buy equals the quantity that producers are willing and able to sell.
2. Recall that quantity demanded refers to the amount of a good buyers want to purchase at a given price, while quantity supplied refers to the amount sellers want to sell at that price.
3. Recognize that when quantity supplied is greater than quantity demanded, there is a surplus, causing downward pressure on prices.
4. Recognize that when quantity demanded is greater than quantity supplied, there is a shortage, causing upward pressure on prices.
5. Conclude that at market equilibrium, the quantity demanded equals the quantity supplied, meaning the market clears with no surplus or shortage.