Market Equilibrium: When the demand and supply forces balance each other to determine a common price point at which the market's demand is exactly met by the supply, the market is said to be in equilibrium. The two market forces are the supply and demand forces which when act in unison, determine a particular price point at which a buyer can buy all they want and the supplier can sell all they want.
Work Step by Step
For example, in the given figure, the demand and supply curve intersect at equilibrium price of USD 2.00 for which the market demand is 7 units of ice-cream. At this point, the market is in equilibrium as at USD 2.00 the market demand is 7 units of ice-cream which is the exact amount of ice-creams the supplier wants to supply.