Equilibrium
The market state in which the quantity demanded equals the quantity supplied at the prevailing price, with no tendency to change.
The exam rarely asks you to define equilibrium — it tests the direction of adjustment. Expect a curve-shift vignette: a non-price determinant moves demand or supply (a change in own price is only a movement along a curve), and you predict the new equilibrium price and quantity. The “tell” is whether one curve shifts or both. With one shift, both move in a determinate direction; when both shift, one of price or quantity is indeterminate without the relative magnitudes — that ambiguity is usually the answer. Stability is the other favorite: equilibrium is stable when supply cuts demand from above (the usual upward-sloping supply). It turns unstable only in the odd case where supply cuts from below — a backward-bending supply flatter than a steep demand — so price diverges instead of converging.
Watch the shift vs. movement trap; the demand and supply pages hinge on it. Memory hook: “ceiling caps price low → shortage; floor props price high → surplus,” and a non-binding control does nothing.
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