Market Equilibrium

Broadly speaking, Equilibrium is a state of rest or balance due to the equal action of opposing forces. In terms of Economics, Equilibrium Price is the price toward which the invisible hand drives the market. At this point, the upward and downward pressure on price is equal and the quantity demanded equals the quantity supplied. The market mechanism naturally present in most markets consists of these counterbalancing pressures. Equilibrium can occur in all types of markets, but the commonly assumed model for its occurrence is the perfectly competitive market. When a market is in equilibrium, there is no excess supply or excess demand.  Equilibrium quantity is the amount bought and sold at the equilibrium price.

Other Dimensions of Market Equilibrium

• When the Market is not in Equilibrium: Shortages and Surpluses
  
• Impact of changes in supply and demand
  • Shifts shown graphically
• Supply and Demand Shocks
• Price floors and ceilings