Which of the following correctly defines the term "equilibrium"?
A) It refers to a situation in which data are used to arrive at conclusions.
B) It refers to a situation in which all economic agents are simultaneously optimizing.
C) It refers to a situation in which an optimizing decision is made by an individual economic agent.
D) It refers to a situation in which government intervention efficiently allocates scarce resources.

Question

Quizplus · Accepted Answer

Equilibrium refers to a situation in which all economic agents (consumers, producers, and firms) are simultaneously optimizing their actions according to market incentives, resulting in a stable outcome where the market clears and there is no excess supply or demand. This concept is fundamental in microeconomics and serves as the basis for analyzing how markets work and how they can be influenced by various factors.

Which of the Following Correctly Defines the Term "Equilibrium