Market Equilibrium relationship: at market equilibrium, what is true about quantity demanded and quantity supplied?

• A. Demand exceeds Supply
• B. Supply exceeds Demand
• C. Demand equals Supply
• D. They are unrelated to each other

Answer: (C)

Market equilibrium is the point where the number of units buyers want to purchase exactly matches the number sellers want to sell. In this situation, quantity demanded equals quantity supplied, so the market clears at the equilibrium price. If the price is higher than this, a surplus appears because more is supplied than demanded, and the price tends to fall. If the price is lower, a shortage occurs because more is demanded than supplied, and the price tends to rise. So, at equilibrium, the two quantities are equal, and the market has no inherent pressure to change until something shifts the demand or supply curves.