Equilibrium Price

Definition

Equilibrium price is the market-clearing price where demand equals supply. It is determined by finding the intersection point on a graph where both curves intersect.

Related terms

Surplus: Occurs when the quantity supplied exceeds the quantity demanded at a given price, resulting in excess supply.

Shortage: Occurs when the quantity demanded exceeds the quantity supplied at a given price, resulting in excess demand.

Price Ceiling: A government-imposed maximum price that can be charged for a good or service, often leading to shortages.