Equilibrium is defined as a situation in which
A) neither buyers nor sellers want to change their behavior.
B) no government regulations exist.
C) demand curves are perfectly horizontal.
D) suppliers will supply any amount that buyers wish to buy.

Question

Quizplus · Accepted Answer

Equilibrium occurs when buyers and sellers are satisfied with their current behaviors and have no desire to change them. This occurs when the market price is such that the quantity supplied is equal to the quantity demanded. Choice B is incorrect because government regulations are not a defining characteristic of equilibrium. Choice C is incorrect because demand curves are rarely perfectly horizontal. Choice D is incorrect because there are limits to the amount suppliers are willing or able to produce.

Equilibrium Is Defined as a Situation in Which