Which Occurs During Market Equilibrium? Check All That Apply
Market equilibrium is a state of balance between the amount of goods and services supplied in the market and the amount demanded by the consumer. This balance is established when the goods and services produced by the market are equal to the amount of goods and services that are being purchased by the buyers, thus creating stability in the marketplace.
When the market is in equilibrium, two important conditions are present. The first is that the amount of goods and services supplied must equal the amount of goods and services demanded. The second condition is that the price for goods and services must also be equal, meaning that the price is neither too high nor too low.
In an equilibrium market, the following conditions occur:
- Supply and demand meet at a specific price.
- Supply is slightly greater than demand.
- The price and quantity are both constant.
- The amount of money spent and exchanged is equal to the amount of money of goods and services exchanged.
When a market is in equilibrium, the consumer has the greatest access to goods and services available with the least amount of cost. It also helps foster a sense of fairness and stability in the marketplace. As long as the conditions of equilibrium are met, the market will remain in balance.
If the market shifts from equilibrium, the price of goods and services can become too high or too low. Supply and demand will no longer be in balance and the market will not be able to regulate itself. This can lead to inefficiencies in the market, as well as an increase in prices, resulting in a decrease in consumer purchasing power.
It is important for markets to remain in equilibrium in order to foster economic stability and ensure that the consumer is able to access the goods and services they need at an affordable price. By understanding and monitoring the conditions of equilibrium, governments, businesses, and consumers are able to ensure that the market remains in balance.