|Definition||A state in which competing forces such as supply and demand are balanced.|
|Related Concepts||Perfect Competition|
What is Equilibrium?
John Spacey, updated on November 17, 2015
Equilibrium is a state in which competing forces are balanced. It's an important concept in economics that's used to model supply and demand. Economics predicts that everything is driven towards equilibrium eventually. For this reason, states such as asset price bubbles can quickly correct to their equilibrium price.
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