Equilibrium

What is market equilibrium?

• A state where quantity demanded equals quantity supplied

• A state where quantity demanded exceeds quantity supplied

• A state where quantity supplied exceeds quantity demanded

• A state where prices are fixed by the government

What happens when there is a surplus in the market?

• Prices tend to decrease to clear excess supply

• Prices tend to increase to stimulate demand

• Supply decreases to match demand

• Demand increases to match supply

Which of the following can cause a shortage in the market?

• Sudden increase in demand

• Decrease in demand

• Increase in supply

• Government-imposed price floors

How do markets typically correct a shortage?

• By increasing prices to reduce demand and increase supply

• By decreasing prices to increase demand

• By increasing supply without changing prices

• By government intervention to fix prices

What is the difference between shortage and scarcity?

• Shortages are temporary, scarcity is a permanent condition

• Scarcity is temporary, shortages are permanent

• Both are temporary conditions

• Both are permanent conditions