Question

Describe what it means when price and quantity supplies are in equilibrium.

(U.S. Government and Economics)

Answer 1

Step-by-step explanation:

The equilibrium price is the only price where the plans of consumers and the plans of producers agree—that is, where the amount consumers want to buy the product, quantity demanded, is equal to the amount producers want to sell, quantity supplied. This common quantity is called the equilibrium quantity.

Answer 2

When price and quantity supplied are in equilibrium, it means that the market is balanced and there is no excess demand or excess supply of the product. At this point, the quantity supplied by the producers is exactly equal to the quantity demanded by the consumers at the prevailing market price. The equilibrium price is the price at which the market clears, and the equilibrium quantity is the quantity that is bought and sold at this price. In this situation, the market is considered to be efficient, as both producers and consumers are satisfied with the market price and quantity. Any deviation from the equilibrium price and quantity will result in either excess demand or excess supply, which will cause the market to adjust towards a new equilibrium.