Question

Which is more important in determining equilibrium price, demand or supply?

Answer 1

In determining the equilibrium price, neither demand nor supply alone is more important. Both are equally essential. As Stonier and Hague rightly state, the price is determined by the interaction of both demand and supply. The equilibrium price is the point at which the quantity demanded equals the quantity supplied. This is the core idea of the demand and supply model. While actual prices may fluctuate, market forces (as explained by Marshall through ‘haggling and bargaining’) tend to push the market toward equilibrium.