Equilibrium Price

Equilibrium price is the price at

Equilibrium price is the price at which consumers are willing to buy the same quantity of a good that producers are willing to sell. At this price, ma

Market equilibrium refers to the state

Market equilibrium refers to the state of the market when demand for a good is equal to its supply. At this point there is no excess demand and no exc

Excess demand occurs when quantity demanded

Excess demand occurs when quantity demanded is greater than quantity supplied. It creates shortage and pushes price upward toward equilibrium.

Excess supply occurs when quantity supplied

Excess supply occurs when quantity supplied is greater than quantity demanded. It creates surplus and pushes price downward toward equilibrium.

An increase in demand raises both

An increase in demand raises both equilibrium price and quantity when supply remains constant. A decrease in demand lowers both equilibrium price and