Question

What is the equilibrium price?

What is meant by equilibrium price?

Answer 1

• The price at which the quantity demanded of a commodity equals the quantity supplied is known as the ‘equilibrium price’. Commodity prices are determined by market demand and supply. At equilibrium, all three, i.e., price, demand and supply, are in equilibrium
• At an equilibrium price, the quantity supplied equals the quantity demanded, leaving no unsold stock. At this pricing, there is no incentive for consumers or sellers to change their behaviour.