Market Equilibrium

• Concept: The point where supply = demand is called equilibrium.
• At this point, there’s no shortage and no surplus.

Example:

• At $2 per apple, demand = 100, supply = 100 → balanced.
• If price is higher ($3), supply > demand → surplus.
• If price is lower ($1), demand > supply → shortage.

Graph:

• Supply (upward) and Demand (downward).
• Intersection point = equilibrium price & quantity.

Key Insight: Free markets naturally move toward equilibrium.