Market Equilibrium

Definition and Key Properties

The market equilibrium is the price-quantity pair $(P,Q)$ such that supply and demand are equal, $Q = Q^{S}(P) = Q^{D}(P)$.
Geometrically, the market equilibrium is the intersection of the supply and demand curves.
At the market equilibrium, there is no excess demand nor excess supply.
If the price is above (below) the market equilibrium price, there is excess supply (demand), and the price tends to decrease (increase).
The price adjustment process. Classroom experiment using the Virginia Econ Lab.
The market equilibrium maximizes the total surplus (consumer plus producer surpluses).