Final answer:
A market in equilibrium is stable, meaning the quantity demanded equals the quantity supplied, and the price does not change. Shifts in demand or supply can lead to changes in equilibrium price and quantity. Market equilibrium is achieved where the supply and demand curves intersect.
Step-by-step explanation:
If the market for ostrich eggs is in equilibrium, then the market is stable. This implies that the quantity of ostrich eggs demanded by consumers is equal to the quantity of ostrich eggs supplied by producers, and there's no pressure on the price to move upward or downward. The status of a market in equilibrium doesn't necessarily indicate whether the market is growing or shrinking; it's simply a condition where supply equals demand at a particular price point.
To further clarify, here are the effects on equilibrium price and quantity for changes in supply and demand:
- Increase in demand: This leads to a higher equilibrium price and quantity as the demand curve shifts to the right.
- Decrease in demand: This results in a lower equilibrium price and quantity as the demand curve shifts to the left.
- Increase in supply: This causes the equilibrium price to fall and quantity to rise, as the supply curve shifts to the right.
- Decrease in supply: This brings about a higher equilibrium price and a lower equilibrium quantity as the supply curve shifts to the left.
The market equilibrium is found when the demand and supply curves intersect, and the market clears at this point without shortages or surpluses.