Market Equilibrium
CBSE · Class 12 · Economics
Summary of Market Equilibrium for CBSE Class 12 Economics. Key concepts, important points, and chapter overview.
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Market equilibrium is the position in a perfectly competitive market where market demand equals market supply and the market clears. At this point, there is zero excess demand and zero excess supply. The market price is called the equilibrium price and the quantity bought and sold is called the equi
Key Concepts
Equilibrium is a situation where
Equilibrium is a situation where the plans of all consumers and firms match and the market clears. It is a zero excess demand-zero excess supply situa
The market demand curve shows
The market demand curve shows the quantity all consumers together wish to buy at different prices, taking price as given. It is downward sloping.
The market supply curve shows
The market supply curve shows the quantity all firms together wish to supply at different prices, taking price as given. It is upward sloping.
If market demand is greater than
If market demand is greater than market supply at a price, excess demand exists. If market supply is greater than market demand, excess supply exists.
Adam Smith is associated with
Adam Smith is associated with the idea that price changes whenever there is imbalance in the market. Excess demand raises price, and excess supply low
Learning Objectives
- Understand the meaning of market equilibrium, excess demand, and excess supply
- Explain how the Invisible Hand adjusts price when the market is out of balance
- Determine equilibrium price and quantity using demand and supply curves
- Apply demand-supply analysis to wage determination in the labour market
- Study how shifts in demand and supply change equilibrium price and quantity
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Sources & Official References
- NCERT Official — ncert.nic.in
- CBSE Academic — cbseacademic.nic.in
- CBSE Official — cbse.gov.in
- National Education Policy 2020 — education.gov.in
Content is aligned to the official syllabus. Refer to the board website for the latest curriculum.
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