How is market equilibrium defined?

Market equilibrium is defined as the point at which the quantity of a good or service that buyers are willing to purchase equals the quantity that sellers are willing to sell. This occurs when supply equals demand. At this point, the market is in a state of balance, and there is neither a surplus nor a shortage of goods. The price at which this balance occurs is known as the equilibrium price, and the quantity is referred to as the equilibrium quantity. This equilibrium condition is fundamental in microeconomics because it helps to establish stable market conditions where resources are allocated efficiently. Changes in factors such as consumer preferences or production costs can shift either the supply or demand curve, leading to a new equilibrium point, thereby illustrating the dynamic nature of markets.