Which of the following must occur to prevent disequilibrium in a market?

• A. Prices must remain fixed regardless of changes in demand or supply.
• B. The government must set a price ceiling below the equilibrium price.
• C. Producers must always increase supply when demand increases.
• D. The quantity demanded must equal the quantity supplied.

Answer: (D)

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 certain price.
2. Recognize that disequilibrium happens when quantity demanded does not equal quantity supplied, leading to either excess demand (shortage) or excess supply (surplus).
3. Analyze the options given: Fixed prices regardless of demand or supply changes can cause shortages or surpluses, so this does not prevent disequilibrium.
4. Note that a government-imposed price ceiling below equilibrium price typically causes shortages, which is a form of disequilibrium.
5. Conclude that to prevent disequilibrium, the market must adjust so that the quantity demanded equals the quantity supplied, ensuring a stable market price.