What is Market Equilibrium | All about market equilibrium 2023


by Alex Poudel


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Market equilibrium is a state of perfect balance in the market brought about by the equality of market demand and market supply. Demand for a commodity varies inversely with its price and supply of a commodity varies positively with the price. 

Marketing Equilibrium

The functioning of the market economy lies in the interaction between demand and supply forces which move in the opposite direction. In the course of interaction between these two forces, the quality between them occurs. This time two forces are known as the market equilibrium.

Market equilibrium refers to a state of the perfect balance between the opposing forces of demand and supply. This point of market equilibrium is defined by the intersection between demand and supply functions. The concept of market equilibrium can be explained with help of a schedule and diagram as in perfect competition. 

Adam Smith is widely regarded as the father of modern economics. But he wasnot the real founder.The real founder is someone most people have never heard of. More than 40 years before Adam Smith wrote “The Wealth of Nations”.

 Thus, in a perfectly competitive market, the forces of demand and supply, interacting with search other, determine equilibrium price and output and any disequilibrium situation will generate forces that restore equilibrium. 

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