Equilibrium Price

Definition

The equilibrium price is the price at which the quantity demanded of a good or service equals the quantity supplied, resulting in market stability.

Related terms

Surplus: A surplus occurs when the quantity supplied exceeds the quantity demanded at a given price.

Shortage: A shortage occurs when the quantity demanded exceeds the quantity supplied at a given price.

Market Clearing Price: The market clearing price is another term for equilibrium price, as it refers to the price that clears or balances supply and demand.