2. Which of the following describes an equilibrium situation? Which does not? Explain your answer.
The restaurants across the street from the university dining hall serve better-tasting and cheaper meals than those served at the university dining hall. The vast majority of students continue to eat at the dining hall.
This does not describe an equilibrium situation. Many students should want to change their behavior and switch to eating at the restaurants. Therefore, the situation described is not an equilibrium. An equilibrium will be established when students are equally as well off eating at the restaurants as eating at the dining hall—which would happen if, say, prices at the restaurants were higher than at the dining hall.
You currently take the subway to work. Although taking the bus is cheaper, the ride takes longer. So you are willing to pay the higher subway fare in order to save time.
This does describe an equilibrium situation. By changing your behavior and riding the bus, you would not be made better off. Therefore, you have no incentive to change your behavior.