Equilibrium Quantity

Published Dec 24, 2022

Definition of Equilibrium Quantity

Equilibrium quantity is defined as the quantity of a good or service that is supplied and demanded in a market at a given price. That means it is the point at which the quantity of a good or service that producers are willing to supply is equal to the quantity that consumers are willing to demand.

Example

To illustrate this, let’s look at the market for apples. Imagine the price of apples is USD 1.00 per pound. At this price, producers are willing to supply 500 pounds of apples, and consumers are willing to demand 500 pounds of apples. Thus, the equilibrium quantity of apples is 500 pounds.

Why Equilibrium Quantity Matters

Equilibrium quantity is an important concept in economics because it helps us understand how markets work. It shows us that when the price of a good or service is right, producers and consumers will be willing to trade at that price. This is the point at which the market is in balance and the quantity of the good or service is stable.

Equilibrium quantity is also important for understanding how changes in the market can affect the price of a good or service. For example, if the demand for apples increases, the equilibrium quantity will also increase. This, in turn, will cause the price of apples to increase as well. Similarly, if the supply of apples increases, the equilibrium quantity will increase, and the price will decrease.