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Which of the following options is correct? Equilibrium is where a
Which of the following options is correct?
Equilibrium is where
a. the quantity demanded of a good equals the quantity supplied.
b. the market clears or balances.
c. the demand and supply curves cross.
d. All of the above.
Expert Solution
Ans: All of the above
Explanation:
- The equilibrium occurs where quantity demanded is equal to quantity supplied. So, option 'a' is correct.
- The market clears where there is no shortage or surplus of a good at the prevailing market price. So, when quantity demanded is equal to quantity supplied, there will be no shortages or surpluses. Thus, the market clears or balances. So, option 'b' is correct.
- The quantity demanded will be equal to quantity supplied only when the demand and supply curve crosses or intersects. So, option 'c' is correct.
Thus, option d is the correct answer.
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