what is meant by equilibrium in 'economics'? how is equilibrium attained?
2007-03-27 03:51:49 · 2 answers · asked by parvez p 1 in Education & Reference ➔ Homework Help
Sorry, I'm not going to write 500 words here, but I have a few ideas ...
Market equilibrium is when the price of a good is determined through competition so that the amount of goods that buyers purchase equals the amount of goods that the producers or sellers provide.
Free Market philosophy (propagated early on by Adam Smith) argues that the forces of supply and demand will create an equilibrium in the market. If demand for an item decreases dramatically, then the price will drop and production will wane. This will balance out the market and create an equilibrium.
Hope this helped! Good luck.
2007-03-27 05:28:55 · answer #1 · answered by Anonymous · 0⤊ 0⤋
This tells all - re-word it a little so your teacher thinks you did it yourself
http://en.wikipedia.org/wiki/General_equilibrium
2007-03-27 04:38:50 · answer #2 · answered by shitstainz 6 · 0⤊ 0⤋