The equilibrium price is where the supply of goods matches demand or the price at which the quantity of a product offered is equal to the quantity of the product in demand. Equilibrium is the state in which market supply and demand balance each other and, as a result, prices become stable. Generally, when there is too much supply for goods or services, the price goes down, which results in higher demand. The balancing effect of supply and demand results in a state of equilibrium.
