Equilibrium exists when:
A) output is distributed equitably.
B) scarcity is eliminated.
C) an individual would be better off taking a different action.
D) no individual has an incentive to change his or her behaviour.

Question

Quizplus · Accepted Answer

Equilibrium exists when no individual has an incentive to change his or her behavior. This means that all parties involved are satisfied with the current situation and have no reason to alter their decisions. In other words, the system is in a state of balance, and there is no pressure to change it. Option A is incorrect because equitable distribution of output is a desirable outcome, but it is not a necessary condition for equilibrium. Option B is incorrect because scarcity is a fundamental economic problem that cannot be eliminated entirely. Option C is incorrect because an individual may choose to take a different action even when the system is in equilibrium, but this does not necessarily disturb the balance.

Equilibrium Exists When