Final answer:
In a perfectly competitive market, the equilibrium price and quantity are where the supply and demand curves intersect. Price naturally adjusts to this equilibrium, eliminating shortages and surpluses and leading to option C) Equilibrium as the likely outcome.
Step-by-step explanation:
Understanding Market Equilibrium in a Perfectly Competitive Market
In a perfectly competitive market, the equilibrium price and equilibrium quantity are found where the supply curve and demand curve intersect. At this point, the quantity of goods demanded by consumers is equal to the quantity of goods that producers are willing to supply. Should the market price be set below this equilibrium point, there would be a shortage, as the demand would outstrip supply. Conversely, if the price is set above the equilibrium, a surplus would occur, with supply exceeding demand. However, in a perfectly competitive market scenario, prices gravitate towards the equilibrium, correcting any initial shortage or surplus to reach a state of equilibrium.
Applying this to the question, if the market is currently in a state of perfect competition, the likely outcome would be option C) Equilibrium. This is because market forces of supply and demand would naturally move the price to the point where quantity demanded equals quantity supplied, with no persisting surplus or shortage.