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We have learned that if the market price is the equilibrium price that desired quantity demanded and desired quantity supplied will be equal. There will be no shortage or surplus of the good. When a market is out of equilibrium, market forces will push the price toward the equilibrium price.

Even if a market is in equilibrium, not everyone will be happy with the equilibrium price and quantity. Governments sometimes impose price ceilings, price floors, or rationing to force markets away from their natural equilibrium price and/or quantity. Market forces will still tend to thwart these policies in a variety of ways. In the case of a price floor above the equilibrium, we saw that the government must be willing to purchase surplus good to support the price floor. In the cases of both price ceilings below the equilibrium and rationing at less than the equilibrium quantity, governments will have to police markets heavily to prevent illegal markets from arising and undoing the price floor or rationing.

Market forces are powerful and the tendency for markets to move toward equilibrium price and quantity is strong. As we will learn in Section 5. Market Adjustments, an understanding of this tendency will aid us in predicting the impact on markets of changes in various economic factors.

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