Equilibrium quantity
Topic: Markets, Equilibrium and Government Intervention · NCERT: Class 9, Ch 9 "The Price Puzzle: What Drives the Market"; Class 12, Ch 5 "Market Equilibrium"
Meaning
The equilibrium quantity (q*) is the amount bought and sold at the equilibrium price (p*). The equilibrium price is the price at which the quantity buyers want equals the quantity sellers offer. At this point the market "clears": there is no shortage and no surplus. Condition: qᴰ(p*) = qˢ(p*) = q*
Example
In the wheat market, qᴰ = 200 − p and qˢ = 120 + p. Setting them equal gives 200 − p = 120 + p, so p* = ₹40 per kg. The equilibrium quantity is q* = 200 − 40 = 160 kg.
Don't confuse with
- Quantity demanded or supplied at any price: at a price other than p*, the two quantities are unequal. At ₹25, buyers want 175 kg but sellers offer only 145 kg, so there is excess demand. Only at p* are the two equal.
Related concepts
- Market equilibrium
- Equilibrium price
- Excess supply
- Invisible hand
- Market forces
- Relative prices
- General equilibrium