13 Facts About Economic equilibrium

In economics, economic equilibrium is a situation in which economic forces such as supply and demand are balanced and in the absence of external influences the values of economic variables will not change.

For example, in the standard text perfect competition, equilibrium occurs at the point at which quantity demanded and quantity supplied are equal.

Market Economic equilibrium in this case is a condition where a market price is established through competition such that the amount of goods or services sought by buyers is equal to the amount of goods or services produced by sellers.

An economic equilibrium is a situation when the economic agent cannot change the situation by adopting any strategy.

Likewise where the price is below the Economic equilibrium point there is a shortage in supply leading to an increase in prices back to Economic equilibrium.

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In most simple microeconomic stories of supply and demand a static equilibrium is observed in a market; however, economic equilibrium can be dynamic.

The Economic equilibrium quantity is obtained from where MR and MC intersect and the Economic equilibrium price can be found on the demand curve where MR = MC.

Nash equilibrium is widely used in economics as the main alternative to competitive equilibrium.

The first use of the Nash Economic equilibrium was in the Cournot duopoly as developed by Antoine Augustin Cournot in his 1838 book.

The Nash Economic equilibrium occurs when both firms are producing the outputs which maximize their own profit given the output of the other firm.

Further, economic equilibrium can correspond with monopoly, where the monopolistic firm maintains an artificial shortage to prop up prices and to maximize profits.

Similarly, in models of inflation a dynamic Economic equilibrium would involve the price level, the nominal money supply, nominal wage rates, and all other nominal values growing at a single common rate, while all real values are unchanging, as is the inflation rate.

DisEconomic equilibrium can occur extremely briefly or over an extended period of time.