What defines the equilibrium price in a market?

The equilibrium price in a market is defined by the point where quantity demanded equals quantity supplied. At this price, the amount of goods that consumers want to buy is exactly equal to the amount that producers want to sell, creating a balance in the market. This state of equilibrium ensures that there is neither a surplus nor a shortage of goods, meaning that all produced goods are sold and all consumer demand is satisfied at that price.

This concept is fundamental in understanding how markets operate, as variations in supply and demand will shift the equilibrium point, leading to changes in the equilibrium price. If the price is above this equilibrium, supply will exceed demand, resulting in unsold goods, while prices below equilibrium will result in high demand and not enough supply to meet that demand. Thus, the equilibrium price represents a stable point in the market where economic forces are balanced.