3.4.1 Equilibrium
Completion requirements
Economic equilibrium occurs when supply and demand are in balance. It is the point at which supply equals demand. The equilibrium price exists where the (hypothetical) supply curve and demand curve intersect.
Competition usually forces the market into equilibrium by constantly pushing prices up or down until the equilibrium point is reached. Theoretically, at equilibrium there is no competition either to buy or to sell because everyone can buy or sell as much as they wish at a price acceptable to both the buyer and the seller.
Competition usually forces the market into equilibrium by constantly pushing prices up or down until the equilibrium point is reached. Theoretically, at equilibrium there is no competition either to buy or to sell because everyone can buy or sell as much as they wish at a price acceptable to both the buyer and the seller.
- the market has only one seller or one buyer (in a monopoly, for example)
- sellers or buyers agree not to compete (the December, 2017 Canadian bread price-fixing conspiracy, for example)
- sellers are unable to compete by price (for example on the dark web, sellers may not know who else buys or sells the item, or they are unsure of the quality of the item offered by other traders)
