Learner Description: This page has been created for high-school students who study IB Economics and are in their first year of the IB Economics course.

What is Market Equilibrium?

Definition: Market equilibrium in economics theory means that supply equals demand on a certain market. The place where the demand curve and the supply curve cross shows the market equilibrium price on the vertical (Price) axis and the equilibrium quantity on the horizontal (Quantity) axis. Free markets always move towards this equilibrium state.

Demand

The button Demand on the concept map to the right will take you to a website on everything you need to know about the Theory of demand.

Supply

Select the button Supply on the concept map to the right to go to a website that has all the needed information on the theory of supply

Diagrammatic illustration

The round button "Diagrams" will take you to a video that shows how markets come back to equilibrium when a shortage or surplus occurs.

Note: The websites linked to the buttons on the concept map open in a new window.