MJ Industries

Market equilibrium is the point where the supply of a good or service meets the demand, establishing a price that both buyers and sellers agree on. It is the cornerstone of a well-functioning market, where negotiations between buyers and sellers shape the prices of goods and services. What is Market Equilibrium? Market equilibrium occurs when the quantity demanded by buyers equals the quantity supplied by sellers. At this point, the market price remains stable, allowing transactions to flow smoothly. For example, let’s consider a market for oranges. Buyers and sellers may negotiate to arrive at a price of $4 per kilogram, at which the quantity of oranges demanded by buyers equals the quantity supplied by sellers. The Role of Supply and Demand in Price Setting The interaction between supply and demand is fundamental in setting prices in any market. The quantity demanded refers to the amount buyers are willing to purchase at a given price, while the quantity supplied refers to how much...