What is meant by an equilibrium price, and quantity?
Prices coordinate the buying plans of consumers, and the production plans of suppliers. Market equilibrium refers to the interaction of supply and demand forces to create an equilibrium price, and quantity. An equilibrium price clears the market of goods and services. It is the point at which quantity demanded equals quantity supplied. For example, at a price of $43, consumers are prepared to purchase 46,000 cartons of cigarettes, on June 28, 2002 in Toronto, Ontario. At this price, there is no tendency for the price to change or for suppliers to provide any more or less of the product to the market.
