What is market equilibrium?

Market equilibrium is achieved when the quantity supplied of a good or service is equal to the quantity demanded. This unique point of balance means that the market is in a state where there is no tendency for the price to change, as the forces of supply and demand are aligned perfectly. At this equilibrium price, consumers are willing to buy exactly as much of the good as producers are willing to sell, resulting in a stable market condition.

In practical terms, if the market is at equilibrium, it reflects efficiency, where resources are allocated optimally without surpluses or shortages. This condition encourages sellers to produce just enough to meet consumer demand, thereby maintaining market stability.