Economists use the term equilibrium to describe situation when:
A) individuals are equal.
B) goods are distributed equitably.
C) there are equal number of buyers and sellers.
D) no individual would be better off taking a different action or no individual has an incentive to change his or her behaviour.

Question

Quizplus · Accepted Answer

Equilibrium refers to a state where no individual has an incentive to change their behavior. In other words, it is a situation where the market clears, and demand equals supply. This means that all buyers who want to buy a good at a given price can do so, and all sellers who wish to sell at that price can do so without any excess supply or demand. In such a situation, no individual would be better off taking a different action or changing their behavior. Therefore, option D is correct.

Economists Use the Term Equilibrium to Describe Situation When