ECONOM 1014 Chapter Notes - Chapter 4: Economic Equilibrium, Equilibrium Point, Demand Curve
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Equilibrium price: the price at which the quantity demanded is equal to the quantity supplied; the price at the point where the supply and demand curves meet. The equilibrium price is stable because at the equilibrium price the quantity demanded is exactly equal to the quantity supplied. When not at this point, prices will adjust to clear the market . Equilibrium quantity: the quantity at which the quantity demanded is equal to the quantity supplied; the quantity at the point where the supply and demand curves meet. 4. 1 at the equilibrium point: the equilibrium price and quantity are the only price and quantity that in a free market are stable. At any other price and quantity, economic forces are put in play that push prices and quantities toward these values. This is the only point where the amount people want to buy matches what people want to sell at that price.
