Final answer:
Equilibrium is a state where the quantity demanded is equal to the quantity supplied. It represents a point of balance in the market where supply and demand meet.
Step-by-step explanation:
Equilibrium is a state where the quantity demanded is equal to the quantity supplied. It represents a point of balance in the market where supply and demand meet. The equilibrium price and quantity are determined by the interaction of buyers and sellers in the market.
For example, if the price of a product is too low, the quantity demanded will exceed the quantity supplied, creating excess demand or a shortage. On the other hand, if the price is too high, the quantity supplied will exceed the quantity demanded, resulting in excess supply or a surplus. Only at the equilibrium price and quantity will supply and demand be balanced.