Explain the concept of economic equilibrium in a market economy.

Explain the concept of economic equilibrium in a market economy.

Economic equilibrium in a market economy refers to a state where the supply and demand for goods and services are balanced, resulting in a stable price and quantity. At this point, there is no inherent tendency for prices or quantities to change. The equilibrium is achieved when the quantity demanded by consumers matches the quantity supplied by producers at a specific price level. Any deviation from this equilibrium will create market forces that drive prices and quantities towards the equilibrium point.