Market equilibrium exists:
A) when assets are underpriced allowing for speculation.
B) when assets are overpriced allowing for short selling.
C) when assets are priced correctly to allow the markets to clear.
D) when the parties involved in trading have heterogeneous expectations which provide the incentive to trade.

Question

Quizplus · Accepted Answer

Market equilibrium occurs when assets are priced correctly, allowing supply and demand to balance out and markets to clear, without excess surplus or shortage.

Market Equilibrium Exists