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Economics vocabulary · Markets, Supply and Demand

Equilibrium

Meaning in economics, with examples

/ˌiːkwɪˈlɪbriəm/nounCore term

In economics, equilibrium means: A situation in which supply and demand are equal, so there is no pressure for the price or the quantity to change.

In Turkish: denge, piyasa dengesi

How it is used

A central word in textbooks and lectures: the equilibrium price and quantity are where the supply and demand curves cross. Markets move towards, reach or return to equilibrium. It is also used for any stable state, such as long-run equilibrium.

Example sentences

  1. At the equilibrium price of 20 lira, buyers want exactly as many units as sellers offer.

  2. After the tax is introduced, the market settles at a new equilibrium with a higher price.

Common collocations

  • equilibrium price
  • equilibrium quantity
  • market equilibrium
  • reach equilibrium
  • long-run equilibrium
  • supplyThe amount of a good or service that producers are willing and able to sell at each possible price during a given period.
  • demandThe amount of a good or service that buyers are willing and able to purchase at each possible price during a given period.
  • marketAny arrangement, physical or online, where buyers and sellers meet to exchange goods, services or assets, and where prices are formed.
  • shortageA situation in which buyers want more of a product than sellers offer at the current price, often because the price is held below equilibrium.
  • surplusAn amount left over: in a market, more supply than demand at the current price; in public finance or trade, more income than spending.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Markets, Supply and Demand

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This page explains English vocabulary for learners. It is not financial advice.