A Level Economics AQA Practice Exam

Which scenario demonstrates an equilibrium state in a market?

1. A price at which there is always a surplus

2. A price at which only some consumers are satisfied

3. A price at which quantity supplied equals quantity demanded

4. A price that fluctuates every day

The correct answer is: A price at which quantity supplied equals quantity demanded

The scenario that demonstrates an equilibrium state in a market is the price at which quantity supplied equals quantity demanded. This is the defining characteristic of market equilibrium, where the intentions of buyers and sellers align perfectly, resulting in no surplus or shortage. When the market is in equilibrium, the resources are allocated efficiently, and both consumers and producers are satisfied at that price level. In contrast, a price that consistently leads to surplus indicates that the supply exceeds demand, suggesting that the market is not in equilibrium. Similarly, a situation where only some consumers are satisfied highlights that demand is not being fully met by the available supply, again indicating a lack of equilibrium. Lastly, a price that fluctuates daily reflects instability in the market, which can create uncertainty and prevent the establishment of a consistent equilibrium price.