Equilibrium: Equilibrium is a concept in which opposing dynamic forces cancel each other out.

  • In a free market, the forces of supply and demand interact to determine equilibrium quantity and equilibrium price.
  • •Equilibrium price – the price toward which the invisible hand drives the market.
  • Equilibrium quantity – the amount bought and sold at the equilibrium price.
  • •When the market is not in equilibrium, you get either excess supply or excess demand, and a tendency for price to change.
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