What is meant by "market equilibrium"?

Market equilibrium refers to a condition in a market where the quantity of goods or services that buyers are willing to purchase equals the quantity that sellers are willing to provide. This balance between demand and supply results in a stable market price for the product. At this equilibrium point, there is no inherent force pushing the price to increase or decrease, which means that the market is in a state of rest concerning those goods or services.

In this scenario, when the quantity demanded equals the quantity supplied, it indicates that consumers are satisfied with the available products at the current price, and producers are able to sell all they wish to at that price. Any increase or decrease in either demand or supply would lead to a shift in the equilibrium, resulting in either a surplus (if supply exceeds demand) or a shortage (if demand exceeds supply).

Understanding market equilibrium is crucial for analyzing market behaviors and making predictions about future price movements based on changes in demand or supply factors.