Final answer:
The statement "Equilibrium occurs where supply equals demand" is correct.
Step-by-step explanation:
In economics, equilibrium refers to a state of balance where the quantity demanded by buyers equals the quantity supplied by sellers at a certain price level. At equilibrium, there is no tendency for prices to change because the market is in balance.
For example, if the price in the market is too high, the quantity supplied will exceed the quantity demanded, creating a surplus. On the other hand, if the price is too low, the quantity demanded will exceed the quantity supplied, resulting in a shortage. Only at the equilibrium price does supply equal demand.