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What is Economic Equilibrium
The economic equilibrium (market equilibrium, sometimes also just equilibrium) is a state of the economy in which the demand and the supply of goods and services are in an even state.

The economic equilibrium (market equilibrium, sometimes also just equilibrium) is a state of the economy in which the demand and the supply of goods and services are in an even state. Put differently, the equilibrium is a state in which the amount of a certain good or service, which customers want to buy (the demand) is equal at a certain price to the amount of the good or service which producers or providers want to supply (the supply). The price established by this equilibrium is often called the competitive price or market clearing price and will tend not to change unless demand or supply changes.

The economic equilibrium in practice: This term is mostly used in economic theory, which describes it as the point which forms an equilibrium between the customers´ benefits and the suppliers´ income. In real life, i.e. in practice, an equilibrium can practically not occur as the conditions of the real market and its surroundings are subject to constant change.

Graph showing point of Economic Equilibrium

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Last update: 01.04.2016

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