What generally characterizes market equilibrium?

Market equilibrium is characterized by the condition where the quantity of a good or service supplied is equal to the quantity demanded at a specific price level. This balance ensures that there is no tendency for the price to change, as all goods produced are sold, and consumer demand is fully met. In this state, the forces of supply and demand are in harmony, which leads to a stable market condition.

When the market is in equilibrium, there are no surpluses (excess supply) or shortages (excess demand). If there were excess supply, it would indicate that producers are offering more of a product than consumers are willing to purchase at that price, potentially leading to a price decrease. Conversely, excess demand would mean that consumers want to buy more than is available, which could result in an increase in price to restore equilibrium. Additionally, price controls enacted by the government can potentially distort this natural equilibrium, leading to either shortages or surpluses, depending on whether the price ceiling or floor is set.

Thus, the correct choice emphasizes the pivotal relationship between supply and demand, reinforcing the concept that market equilibrium is achieved when these two forces are equal.