Equilibrium price

Let's begin by understanding what is meant by the equilibrium price in a market. The equilibrium price is the point at which the quantity of a good demanded by consumers exactly equals the quantity supplied by producers. This is where the demand and supply curves intersect, and it reflects the price at which there is neither a surplus nor a shortage in the market. At equilibrium, every unit that is produced finds a buyer, and every buyer who is both willing and able to pay the price can make their purchase. This ensures that resources are allocated efficiently and there is a balance in the market. To see how equilibrium price is determined, imagine a chart or diagram with the price on the vertical axis and quantity on the horizontal axis. The demand curve slopes downward, showing that consumers buy more at lower prices, while the supply curve slopes upward, indicating that producers are willing to supply more at higher prices. Where these two lines cross is the equilibrium point. If the price happens to be above this point, there will be a surplus. Producers will have unsold goods. If the price is set below equilibrium, there will be a shortage because more people want the good than is available. As a result, the market naturally adjusts, moving towards the equilibrium price. It's important to recognize that equilibrium price is not fixed. It can change whenever there's a shift in either the demand curve or the supply curve. For example, if consumer preferences change and demand increases, the entire demand curve moves to the right. The result is a higher equilibrium price