short run market equilibrium
when the quantity supplied equals the quantity demanded, taking the number of producers as given
Short run market equilibrium refers to the point at which the quantity of a good or service demanded by consumers is equal to the quantity supplied by producers at a given market price. This means that there is no excess supply or demand, and the market is in a state of balance.
In the short run, the level of production of goods and services is constrained by fixed inputs, such as capital equipment or resources that cannot be easily expanded. As a result, changes in demand or supply can have significant effects on the market equilibrium price.
For example, if demand for a product suddenly increases, this will lead to a shortage, as the quantity supplied cannot immediately increase to meet this demand. This puts upward pressure on prices as consumers compete for a limited supply of the good.
In contrast, a decrease in demand will lead to a surplus, as producers will be unable to sell their full supply of goods at the going market price. This will put downward pressure on prices as they try to clear their excess inventory.
Overall, short run market equilibrium is an important concept for understanding how supply and demand interact in the short term, and can help businesses to make strategic decisions about production and pricing.