Answer to Question #15299 in Macroeconomics for Wish List
2. Market equilibrium occurs when:
A) there is no incentive for prices to change in the market.
B) quantity demanded equals quantity supplied.
C) the market clears.
D) there is no incentive for prices to change in the market, quantity demanded equals
quantity supplied, and the market clears.
The correct answer is D. The system is in equilibrium when there is no tendency for it to change under existing conditions. Market equilibrium exists when quantity supplied is equal to quantity demanded. When a market is in equilibrium, there is no tendency for the market price to change. In other words, the equilibrium price is stable under the existing market conditions.