A market will be at equilibrium when

1. Analyze the question The question asks about the condition for market equilibrium. "Equilibrium" means a state of balance, where there is no tendency for price or quantity to change.

2. Explain the concept In a market, buyers (demand) and sellers (supply) interact to determine price.

• If demand > supply, there is a shortage (excess demand). Price tends to rise.
• If supply > demand, there is a surplus (excess supply). Price tends to fall.
• If demand = supply, quantity demanded equals quantity supplied. There is no shortage or surplus, so price has no pressure to change. This is equilibrium.

The price at which this happens is the equilibrium price, and the quantity traded is the equilibrium quantity. On a graph, it is the point where the demand curve crosses the supply curve.

3. Solution, option by option

• A. Demand and supply are equal: Correct. This is the definition of equilibrium.
• B. Demand is greater than supply: This is a shortage, so the market is in disequilibrium.
• C. Price is higher: A higher price alone says nothing about balance. A price above equilibrium actually creates a surplus.
• D. Supply is greater than demand: This is a surplus, so the market is in disequilibrium.

4. Answer

5. Exam tip Remember: "Equilibrium = Equal." Whenever you see a question on market equilibrium, look for the option saying quantity demanded equals quantity supplied (Qd = Qs). If you see "greater than", think shortage or surplus, which means the market is not yet balanced.