Equilibrium

Definition

Equilibrium refers to a state of balance or stability in the market where the quantity demanded by consumers is equal to the quantity supplied by producers.

Related terms

Surplus: A surplus occurs when the quantity supplied exceeds the quantity demanded, resulting in excess inventory or unsold goods.

Shortage: A shortage happens when the quantity demanded exceeds the quantity supplied, leading to insufficient supply to meet consumer demand.

Price Elasticity of Demand: Price elasticity of demand measures how sensitive consumers are to changes in price. It determines whether a change in price will result in a significant change in quantity demanded.