Question

For each of the following statements about a market equilibrium, identify whether the statement is always true, never true, or sometimes true.

A. Market equilibrium occurs when demand equals supply.
B. Price and quantity are indeterminate at equilibrium.
C. Market equilibrium is always stable.
D. External factors do not impact market equilibrium.
E. Sometimes true for all statements.

Answer 1

In summary, market equilibrium is the point where supply equals demand, with determinate price and quantity. It sometimes remains stable but can be affected by external factors such as shifts in demand or supply due to changes in tastes, technology, or government policies.

Step-by-step explanation:

Market Equilibrium Analysis

Let's analyze each statement with regards to market equilibrium:

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Market equilibrium reflects a balance in the market and will remain stable unless disrupted by external factors. These factors can move the equilibrium price and quantity in response to changes in market conditions. Price ceilings and price floors are examples of government interventions that can lead to a departure from equilibrium, causing shortages or surpluses.