What does "market equilibrium" refer to?

Market equilibrium is defined as the point where the quantity demanded by consumers equals the quantity supplied by producers at a specific price. At this equilibrium price, there is no excess supply or excess demand, and the market is in balance. This is significant because it indicates an efficient allocation of resources, where the desires of consumers for goods and services are perfectly met by the supply created by producers.

This concept is central to understanding how markets operate, as movement away from equilibrium leads to surpluses or shortages, prompting adjustments in price and quantity. In essence, market equilibrium ensures that resources are utilized effectively, and both buyers and sellers are satisfied with the transaction conditions at that price level.

The other options do not accurately represent market equilibrium: while supply exceeding demand indicates a surplus, it does not define equilibrium; consumer satisfaction at a particular price level is subjective and varies across different markets; the intersection of the supply and demand curves visually represents where equilibrium occurs but does not comprise the complete definition. Thus, the correct definition emphasizes the balance of quantity demanded and supplied.