equilibrium market price
equilibrium market pricethe market clearing price at which the demand for a PRODUCT, FINANCIAL SECURITY, FOREIGN CURRENCY or COMMODITY is just equal to the supply of it. The demand curve in Fig. 38 is downward sloping, indicating that as price falls buyers will be prepared to purchase more of the product; the supply curve is upward sloping, indicating that as the price of the product increases suppliers will be prepared to offer more of it. Price OP is the equilibrium market price and OQ the amount of the product transacted. At prices initially higher than OP there is excess supply over demand which in a free market situation will cause the price to fall, while at prices initially lower than OP there is excess demand over supply which will cause the price to rise. In many markets, however, price levels are likely to be distorted both by the presence of powerful suppliers (see MONOPOLY, CARTEL, COLLUSION) and by governmental PRICE CONTROLS. See MARKET, MARKET SYSTEM, FLUCTUATING EXCHANGE RATE SYSTEM, STOCK MARKET, SPOT MARKET, FORWARD MARKET, COMMODITY MARKET.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
equilibrium market pricethe PRICE at which the quantity demanded of a good is exactly equal to the quantity supplied (see DEMAND, SUPPLY). The DEMAND CURVE depicts the quantity that consumers are prepared to buy at particular prices; the SUPPLY CURVE depicts the quantity that producers are prepared to sell at particular prices.
equilibrium market price (changes in)an increase or decrease in PRICE resulting from a shift in the DEMAND CURVE or SUPPLY CURVE. See DEMAND CURVE ( SHIFT IN), SUPPLY CURVE ( SHIFT IN).
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005