What is the equilibrium price?
The price and the quantity where demand equals supply; price and quantity toward which a free market automatically moves.
The equilibrium price is the price at which the quantity demanded of a product or service is equal to the quantity supplied, resulting in a balance between buyers and sellers in a market. This means that at the equilibrium price, the market is in a state of balance where the quantity supplied is equal to the quantity demanded, and there is no surplus or shortage of the product available.
The equilibrium price can be influenced by various factors such as changes in consumer preferences, shifts in supply and demand curves, changes in prices of related goods and services, and government policies. Understanding the equilibrium price is crucial for businesses to make informed decisions about pricing and production quantities, and it also helps to predict how changes in the market will affect their profitability and competitiveness.
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