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What is Equilibrium of Demand and Supply?
The term “Equilibrium” can be defined in terms of a price-quantity pair in which the amount that is demanded is equal to the amount that is supplied. It is graphically represented in the form of intersection of demand and supply curves. The equilibrium occurs when the supply and demand curve is found to intersect at a specific point.
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Taking a look at its importance
When the supply and demand curves intersect, supply and demand can be said to be at equal and you can regard the economy to be at equilibrium. At the point of equilibrium, all goods are apportioned in the most efficient manner. This is due to the fact that supply of goods matches the demand for them. This type of economic condition is actually favored by most companies, individuals and countries.
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