What is equilibrium price, how to calculate the equilibrium price with examples.:- StudySpot

EQUILIBRIUM PRICE 💰💶💲

The equilibrium refers to a state of market in which quantity demanded of a commodity equals the quantity supplied of the commodity. The equality of the demand and supply results in an commodity equals its quantity supplied. The equilibrium price is also called as market - clearing price . 

Why do we need equilibrium price :- 

Equilibrium is important to create both a balanced market and an efficient market. If a market is at its equilibrium price and quantity, then it has no reason to move away from that point, because it's balancing the quantity supplied and the quantity demanded. Therefore equilibrium price is vital in economics. 

How to calculate the equilibrium price

Example:- 
Question:-In a vegetable market demand for the tomato is given by 100- 25p and supply of the tomato is given by 15p .
Solution:- Given :- market demand 100 -25p and supply :- 15p
Formula for finding equilibrium price:- quantity of demand (qd)= quantity of supply(qs) .
Calculate:- qd=qs
100-25p = 15p
100=15p +25p 
100=40p
100/40=p
2.5=p
Hence, Equilibrium price is 2.5 so the price of tomato is 2.5 per kg.


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