Market Disequilibrium Leads to Price Adjustments

Steps:

• Define market disequilibrium as a state where quantity supplied does not equal quantity demanded at the current price.
• Recognize that excess supply or demand creates pressure for price changes to balance the market.
• Apply the law of supply and demand, which drives prices up with shortages or down with surpluses.
• Eliminate options that contradict this dynamic process.

Why A is correct:

• In disequilibrium, the law of supply and demand ensures prices adjust to restore balance, making change likely.

Why the others are wrong:

• B: Disequilibrium means supply does not equal demand, the opposite of equilibrium.
• C: Markets can self-correct without government intervention in free systems.
• D: Disequilibria can cause surpluses, not just shortages.

Final answer: A