1. Equilibrium priceequalizes demand and supply.

2. Supply isconstant in very short period.


1. Equilibrium price.

There is only one price atwhich the preferences of seller and buyer meet together.

At a particular price, thequantity demanded and a quantity supplied will become equal.

At this price quantitybought and quantity sold will be equal.

2. Short periods

During the short period,supply can be altered to some extent only.

Supply cannot be fullyaltered to the demand changes.

Raising demand increasesthe price lightly and a falling demand decreases the price slightly.


1. How is the equilibrium price determine?

  • It is clear from the table givenbelow that demand decreases and supply increases when the price rises.
  • At this price the quantity bought(demand) and the quantity sold ( supply) will be equal.
  • This price equalizes the demandand supply
Price(in Rs) Demand(in kilos) Supply(in kilos)
20 5 1
40 4 2
60 3 3
80 2 4
100 1 5
  • When the price of mangoes is Rs.20per kg, demand is 5 kg and the supply is 1 kg.
  • When the price raises to Rs 40,60, 80, 100 and the demand decreases to 4, 3, 2, 1 kg and the supply raises to2, 3, 4, 5 kg.
  • At a particular price the demandand supply are equal that is 3 kg.
  • This price is called equilibriumprice and the quantity is called equilibrium quantity.
To Top