A market equilibrium exists when the quantity of a good or service demanded by buyers is equal to the quantity supplied by sellers at a specific price. In other words, a market equilibrium is reached when the demand for a product is matched by the supply of that product, resulting in a stable price.
At the equilibrium price, buyers are willing to purchase exactly the same quantity of the product that sellers are willing to sell. There is no excess demand or excess supply in the market. Buyers who are willing to pay the equilibrium price are able to purchase the product, and sellers who are willing to sell at that price are able to sell their product.
When the price is above the equilibrium level, the quantity supplied exceeds the quantity demanded, resulting in a surplus. This surplus causes sellers to lower their prices to sell their excess supply, which eventually brings the market back to equilibrium.
On the other hand, when the price is below the equilibrium level, the quantity demanded exceeds the quantity supplied, resulting in a shortage. This shortage causes buyers to bid up the price to obtain the product, which eventually brings the market back to equilibrium.
Overall, a market equilibrium is a state of balance between supply and demand, where both buyers and sellers are able to trade at a mutually agreed upon price.