market equilibrium

Market equilibrium in economics describes the state where the quantity of a commodity that producers wish to sell at a certain price is equal to the quantity that consumers wish to buy at that same price. This point is known as the equilibrium price, representing an agreement between producers and consumers.12

The interaction of supply and demand determines this equilibrium price. The demand curve illustrates how much consumers will buy at various prices, typically showing that demand increases as prices fall. Conversely, the supply curve shows how much producers will offer at different prices, usually indicating that supply increases with higher prices. When these two forces balance, the market reaches equilibrium.1