Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Quantity demanded equals quantity supplied
B
Prices are rising
C
There is a surplus of goods
D
There is a shortage of goods
Understanding the Answer
Let's break down why this is correct
Answer
At the point of economic equilibrium in the aggregate demand and supply model, the total amount of goods and services that consumers want to buy matches the total amount that producers want to sell. This means that the quantity of goods demanded equals the quantity of goods supplied, leading to a stable price level in the economy. For example, if people want to buy 100 apples and farmers are willing to sell exactly 100 apples at a certain price, the market is in equilibrium. If the price were too high, fewer people would buy apples, and if it were too low, farmers wouldn't want to sell as many, creating a mismatch. Thus, equilibrium helps maintain balance in the economy, ensuring that resources are allocated efficiently.
Detailed Explanation
At economic equilibrium, the amount people want to buy matches the amount businesses want to sell. Other options are incorrect because Rising prices suggest demand is higher than supply; A surplus means there are too many goods and not enough buyers.
Key Concepts
Economic Equilibrium
Topic
Aggregate Demand and Supply Analysis
Difficulty
easy level question
Cognitive Level
understand
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