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Table 4.1 "Market Equilibrium: An Example" provides an example of market equilibrium. Because the demand curve has a negative slope and the supply curve has a positive slope, supply and demand will cross once, and both equilibrium price and equilibrium quantity The quantity supplied and demanded at the equilibrium price. There are no disappointed buyers or sellers. At the equilibrium price A price such that the quantity supplied equals the quantity demanded., suppliers of the good can sell as much as they wish, and demanders of the good can buy as much of the good as they wish. We speak of equilibrium because there is a balancing of the forces of supply and demand in the market. In a competitive market, equilibrium price and quantity are determined by the intersection of the supply and demand curves. In a competitive market, buyers and sellers take the price as given they think their actions have no effect on the price in the market.

There are many buyers and many sellers, all of whom are small relative to the market.A market is said to be competitive, or, more precisely, to exhibit perfect competition, under two conditions: The supply-and-demand framework applies to the case that economists call a competitive market A market that satisfies two conditions: (1) there are many buyers and sellers, and (2) the goods the sellers produce are perfect substitutes. The toolkit contains a presentation of supply and demand that you can use for reference purposes in this and the following chapters. The intersection of supply and demand determines the equilibrium price and quantity that will prevail in the market. A point on the market demand curve shows the quantity that demanders are willing to buy for a given price. A point on the market supply curve shows the quantity that suppliers are willing to sell for a given price. is a framework we use to explain and predict the equilibrium price and quantity of a good.

Supply and demand A framework that explains and predicts the equilibrium price and equilibrium quantity of a good. Toolkit: Section 16.6 "Supply and Demand"