Market equilibrium
Definition. Market equilibrium is the situation in a market where the quantity demanded equals the quantity supplied at the prevailing price, so there is no tendency for the price to change. It is shown by the intersection of the demand and supply curves.
At equilibrium the market clears, with no shortage or surplus, and the combined consumer and producer surplus is maximised. A shift in demand or supply moves the market to a new equilibrium price and quantity.
This term belongs to Consumer and Producer Surplus in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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