Equilibrium Price
The market price at which quantity supplied equals quantity demanded, with no surplus or shortage.
What is Equilibrium Price?
The equilibrium price is the market price at which the quantity of a good supplied exactly equals the quantity demanded, resulting in no surplus and no shortage. It is determined by the intersection of the supply and demand curves and is a central concept in microeconomics. Prices above equilibrium create surpluses that push prices down; prices below create shortages that push prices up until balance is restored.
Example
In the US housing market, prices above equilibrium — driven by supply shortfalls — cause home values to remain elevated. New construction gradually increases supply while higher prices dampen some demand, moving the market toward a new equilibrium over time.
Source: CFA Institute — Economics