Calculating Economic Equilibrium

By Jodi Beggs, About.com Guide

Once the supply and demand curves are substituted into the equilibrium condition, it's relatively straightforward to solve for P. This P is referred to as the market price P*, since it is the price where quantity supplied is equal to quantity demanded.

To find the market quantity Q*, simply plug the equilibrium price back into either the supply or demand equation. (Note that it doesn't matter which one you use since the whole point is that they have to give you the same quantity!)

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• Calculating Economic Equilibrium
• Calculating Economic Equilibrium
• The Equilibrium Condition Relates Supply and Demand
• Solving for P* and Q*
• Comparison to the Graphical Solution

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