Economics Welfare Economics Questions
Market equilibrium refers to a state in which the quantity demanded by consumers is equal to the quantity supplied by producers at a specific price level. It is the point where the forces of demand and supply intersect, resulting in an optimal allocation of resources and the absence of any excess demand or supply in the market. At equilibrium, there is no incentive for producers to change the price or quantity supplied, and consumers are willing to purchase the quantity available at the prevailing price. This balance between demand and supply ensures efficiency and maximizes social welfare in the market.