2.3.1—Market equilibrium

Market equilibrium is the price and quantity at which quantity demanded equals quantity supplied. No surplus or shortage pushes the market away from that point.

At a price above equilibrium, surplus pressures sellers to reduce price; below it, shortage pressures buyers to bid price up.

Locate the intersection, compare actual price with equilibrium and identify surplus or shortage.

Demand and supply meet at $6 and 100 units; at$8, firms offer more than buyers want, creating surplus.

Equilibrium is a tendency under stated conditions, not proof that every buyer is satisfied.