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Okay, now for the exciting part! **Market equilibrium** is the point where demand and supply intersect. At this point, the quantity demanded equals the quantity supplied, and the market clears – there's neither a surplus (too much supply) nor a shortage (too little supply). The price at this intersection is known as the **equilibrium price**, and the quantity is the **equilibrium quantity**. Finding this balance is the goal of every market. When the market is *not* at equilibrium, there are forces that push it towards equilibrium. If the price is *above* the equilibrium price, there's a surplus (supply exceeds demand), and prices tend to fall as sellers compete to sell their excess inventory. Conversely, if the price is *below* the equilibrium price, there's a shortage (demand exceeds supply), and prices tend to rise as buyers compete for the limited supply. The beauty of the market is that it naturally gravitates towards equilibrium through the interaction of buyers and sellers. It's like a self-correcting system. Understanding equilibrium helps us understand how markets allocate resources efficiently. This is the point where the market is most stable. When the equilibrium changes, it can be due to a shift in the demand curve or supply curve or both. Shifts in demand or supply change equilibrium.
