Which of the following statements about demand and supply interaction is TRUE?
A) A market is said to be in equilibrium when the elasticity of demand equals the elasticity of supply.
B) For a market to be in equilibrium, the price and quantity that buyers are willing to accept must be greater than the price and quantity that suppliers are willing to offer.
C) The interaction of supply and demand determines the size of the market and the market price.
D) Demand determines price.
E) All of the above are true.

Question

Quizplus · Accepted Answer

The interaction of supply and demand determines the size of the market and the market price. This is the basic concept of market equilibrium, where the quantity demanded equals the quantity supplied at a certain price, resulting in an equilibrium price that clears the market. Therefore, option C is the correct statement. Option A is incorrect because elasticity is not a condition for market equilibrium. Option B is incorrect because for a market to be in equilibrium, the price and quantity supplied must equal the price and quantity demanded. Option D is incorrect because demand alone does not determine price; it is the interaction of demand and supply that determines price.

Which of the Following Statements About Demand and Supply Interaction