Equilibrium means that the desired quantity demanded and the desired quantity supplied are equal. Neither suppliers nor demanders have any incentive to change their behavior, unless something that affects either demand or supply, or both, changes. When such a change occurs, the market equilibrium is disturbed and the market moves to a new equilibrium price and quantity.

Our understanding about the way in which markets work, the factors that affect demand and supply, enables us to make basic predictions about the direction of the change in the equilibrium price and quantity that occur as a result of these market changes.

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