Market equilibrium is best described as:

• A. It occurs when quantity demanded equals quantity supplied.
• B. Prices are set by government intervention.
• C. There is no change in price over time.
• D. Demand exceeds supply at all prices.

Answer: (A)

Market equilibrium is the point where the quantity of goods demanded by buyers equals the quantity supplied by sellers. At this balance, the market clears: there is no inherent pressure for the price to move, so the price settles at the equilibrium level and the corresponding quantity is the equilibrium quantity.

If demand were higher than supply, we'd have excess demand and prices would tend to rise, encouraging more production and reducing demand until balance is restored. If supply were higher than demand, we'd have excess supply and prices would tend to fall, again moving the market back toward equilibrium.

So the defining idea is that equilibrium occurs when quantity demanded equals quantity supplied. The other statements describe scenarios that indicate a price control, a constant price regardless of changes, or a persistent shortage, none of which describe the market-clearing condition.