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Reaching Equilibrium

Reaching Equilibrium

Author: Joe McClellan

Understand how prices are a result of producers and consumers working to reach a point where supply and demand meet.

In a free market, prices tend to move naturally toward Equilibrium - that is, a price point where the quantity supplied is the same as the quantity demanded.  When the market is in a state of equilibrium, there is not a shortage of the good and there is not a surplus either.

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Economics: Price Equilibrium