What is equilibrium quantity in economy

Equilibrium price

Price of goods at which the quantity of supply and demand in a market match.

The price that arises or would result if, after the (free) play of the forces of the market, the volume of supply and demand with regard to this price is or would be in equilibrium.

is the market price at which the amount of goods that the suppliers are willing to sell corresponds to the amount that the customers are willing to buy. It thus represents the price at which the largest possible quantity of goods is sold and the market is emptied. For prices that are above / below the equilibrium price, these quantities will differ.

Price that ensures in a market that the quantities offered and demanded are the same, i.e. the market is cleared. There remains neither an excess of supply nor excess of demand. In the case of complete competition in one market, the supplier and the customer behave as volume adjusters. The equilibrium price is therefore determined by the individual actions of the two sides of the market together and results graphically at the intersection of the supply and demand curve. At this price, the purchase wishes of those who are willing to pay this price or a higher price are satisfied. Likewise, the sales plans of the providers who are willing to sell at this or a lower price are being fulfilled.

Unit price in market equilibrium. In the equilibrium price, the function values ​​of the supply function and the demand function coincide.

Price theory

Market price with complete competition, which leads to a match between supply and demand. It results from the intersection of the supply and demand curve for a specific good (Fig.).
At the equilibrium price, the demanders are ready to buy exactly the amount that the suppliers are ready to sell. Therefore, no market participant has any reason to change their plans. The amount converted is greatest in equilibrium. In the case of a different price, the quantity requested or offered is smaller than the quantity sold at the equilibrium price (equilibrium quantity). When the equilibrium price is realized, the social surplus (sum of consumer surplus and producer surplus) is maximized.

In price theory, a price at which supply and demand are exactly balanced on a perfect market, i.e. the same amount is offered as is demanded. Under conditions of the perfect market, the equilibrium price is set automatically and cannot be influenced by the providers. The providers only have the option of a quantity strategy, i.e. the possibility of adapting their sales volumes to the given price in such a way that they achieve their profit maximum, profit maximization.







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