Which economic model describes the interaction between supply and demand?

The concept of market equilibrium is central to understanding how supply and demand interact within an economy. Market equilibrium occurs at the point where the quantity of a good or service demanded by consumers matches the quantity supplied by producers. At this balance point, there is no inherent pressure for the price to change; instead, the market is said to be in a stable state.

This model illustrates how prices are determined in a competitive market setting, as shifts in either supply or demand can disrupt equilibrium. For example, if demand increases while supply remains constant, prices will rise until a new equilibrium is established. Conversely, if there is an increase in supply while demand remains stable, prices may decrease until a new balance is achieved. Therefore, market equilibrium effectively captures the dynamic interplay between supply and demand forces, making it the most fitting model to represent their interaction.

The other options, while related to economics, do not specifically describe the interaction between supply and demand. The production possibility frontier illustrates the trade-offs between different goods that an economy can produce, consumer surplus focuses on the benefit consumers receive when they pay less than what they are willing to pay, and comparative advantage explains how and why countries or entities specialize in the production of certain goods to maximize efficiency and trade. Each of these