At the equilibrium price,

Step 1: Analyze the question The question asks what is true at the equilibrium price. Equilibrium is the point where the market "settles," with no pressure for the price to change.

Step 2: The concept In a market, two forces interact:

• Demand: the quantity buyers are willing and able to buy at each price.
• Supply: the quantity sellers are willing to offer at each price.

The equilibrium price is the price at which quantity demanded = quantity supplied. This is where the demand and supply curves intersect.

Step 3: Test each option

• A. Demand greater than supply: This describes a shortage (excess demand), where the price is below equilibrium and tends to rise. Wrong.
• B. Demand equates supply: The quantity demanded equals the quantity supplied, so the market clears. Correct.
• C. Demand less than supply: This describes a surplus (excess supply), where the price is above equilibrium and tends to fall. Wrong.
• D. Price equal to demand only: Price is not "equal" to demand, and this leaves out supply. Wrong.
• E. Price equal to supply only: This has the same problem. Wrong.

Step 4: Answer At the equilibrium price, demand equals supply, so there is neither a shortage nor a surplus.

Tip: Remember the two disequilibrium cases:

• Price too low gives a shortage (demand > supply), so price rises.
• Price too high gives a surplus (supply > demand), so price falls.

Equilibrium is the "balance point" between them.