Answer to Question #250530 in Microeconomics for Muskan

Question

1.     Define the equilibrium of a market. Describe the market forces that move a market towards its equilibrium.

Answer 1

Market equilibrium refers to a situation in which the market's supply and demand are equal.

Market forces that move a market towards it's equilibrium include;

(a)Demand Formula: As the price of the commodity rises, demand falls, and as the price of the commodity falls, demand rises. Because everyone wants to get a good deal.

(b)Supply Formula;When the price of a commodity rises, suppliers will raise their supply. Suppliers will supply less when the price of the commodity falls. Because everyone wants to sell at a greater price in order to make more money.

Market equilibrium is defined as a scenario in which the quantity requested for a certain good commodity equals the quantity provided. There is no tendency for prices to move while the market is in equilibrium. The market clearing price, we say, has been reached. Demand and supply work together to determine the price and amount of goods bought and sold in a market.