HISET Social Studies Practice

Which concept describes the intersection of supply and demand in the market?

1. Market equilibrium

2. Market inefficiency

3. Market fragmentation

4. Market saturation

The correct answer is: Market equilibrium

The concept that describes the intersection of supply and demand in the market is market equilibrium. At this point, the quantity of goods or services that consumers are willing to purchase equals the quantity that producers are willing to sell. This balance between supply and demand results in a stable market price and quantity of goods exchanged, as neither a surplus nor a shortage exists. Market inefficiency refers to a situation where resources are not allocated optimally, leading to wasted opportunities in the market. Market fragmentation describes a market that is divided into various segments or niches, often making it more complex and less efficient. Market saturation occurs when a product has become so widespread that nearly all potential customers have purchased it, often leading to reduced demand. Each of these concepts addresses different aspects of market dynamics, but only market equilibrium specifically relates to the point where supply and demand meet.