Answer to Question #166683 in Microeconomics for Marc

Question

The most important signal for the market to reach equilibrium is...

Answer 1

Price.

At a specific product price, the market demand and the market supply equalize, achieving equilibrium. The changes in supply and demand changes affect the price when there is an increase in supply, the price drops, and vice-versa. When there is an increase in demand, the price rises, and vice-versa. At the point where both the demand and supply curve bisect then, that is the point of equilibrium with an equilibrium price.