Market Equilibrium


Definition - What does Market Equilibrium mean?

Market equilibrium, in economics, is the term given to a state that arises in a market where the supply in a market is equal to the demand in a market. The price of a product varies depending on how equal supply and demand are within the market. Usually price lowers when demand is low and supply is high and the opposite is also typical.

Safeopedia explains Market Equilibrium

The equilibrium price in a market for a product is an important piece of information to know when running a business. Market equilibrium usually happens naturally and it is important to control supply and demand to reduce costs and increase profits. Market equilibrium often remains fairly stable after it is achieved, as there is neither a surplus nor shortage in a market.

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