Market equilibrium.
Definition
The point at which the quantity of a good or service demanded by buyers equals the quantity supplied by sellers, resulting in a stable market price. When the market is not at equilibrium, surpluses or shortages push the price toward the equilibrium point.
Examples
Real-world.
- 1 If too many apartments are available and few renters want them, landlords lower rents until the market balances
- 2 When a new smartphone launches with limited supply, high demand drives prices up until equilibrium is reached
- 3 The price of gasoline adjusting seasonally as summer driving increases demand