2.3 Market Equilibrium
The supply and demand curves jointly determine the price and quantity at which a good or service is bought and sold. The demand curve shows the quantities consumers want to buy at various prices, and the supply curve shows the quantities firms want to sell at various prices. Unless firms set the price so that consumers want to buy exactly the same amount that suppliers want to sell, some consumers cannot buy as much as they want or some sellers cannot sell as much as they want.
When all market participants are able to buy or sell as much as they want, we say that the market is in equilibrium: a situation in which no participant wants to change its behavior. A price at which consumers can buy as much as they want and sellers ...
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