Unit 2.3: Competitive market equilibrium
This page examines the concept of market equilibrium. Equilibrium occurs in markets where demand equals supply and the market-clearing price and output are established. Equilibrium in markets occurs when demand equals supply, establishing the market-clearing price and output. Diagram 2.31 illustrates the equilibrium in the market for olive oil. If the price of a good is not at the equilibrium level there is natural...