Question

A state of equilibrium indicates

• A. No supply against demand
• B. No demand against supply
• C. Both demand and supply stand independent
• D. Supply equals the demand

Hint:

Visualize the standard supply and demand graph. The equilibrium is the single point where the supply curve and the demand curve intersect. At this point, quantity supplied = quantity demanded.

Answer 1

The Correct Option is D

Step 1: Understanding the Concept of Equilibrium:
In economics, equilibrium is a state where economic forces such as supply and demand are balanced and in the absence of external influences, the values of economic variables will not change. It is the point where the quantity of a good that buyers are willing and able to buy exactly equals the quantity that sellers are willing and able to sell.

Step 2: Analyzing the Options:


(A) No supply against demand and (B) No demand against supply: These describe states of extreme shortage or surplus, respectively, which are states of {disequilibrium}.
(C) Both demand and supply stand independent: This is incorrect. The concept of equilibrium is precisely about the {interaction} of demand and supply to determine price and quantity.
(D) Supply equals the demand: This is the definition of market equilibrium. At the equilibrium price, the quantity supplied is equal to the quantity demanded. There is no shortage or surplus.

Step 3: Final Answer:
A state of equilibrium indicates that Supply equals the demand.