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And finance Allah shmoop what is market equilibrium All right

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people when we're talking market equilibrium we're talking about the

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market for a specific good or service pick a thing

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Anything Market equilibrium happens when the quantity demanded of a

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thing equals the quantity supplied of a thing at a

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given price Well at market equilibrium there's no excess supply

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which would mean you know cranky suppliers and no excess

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demand which would mean cranky consumers at equilibrium Everybody's chill

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at a price Well the reason economist gush over market

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equilibrium like a diehard believer at a J Beat's concert

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is because well it's kind of a magical force of

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its own Like the mother nature of capitalism When the

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market is competitive market equilibrium happens naturally If you ever

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heard of Adam Smith's invisible hand well this is what

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he was talking about In a perfectly competitive market where

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there are lots of equally size sellers selling no Amazons

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or Walmart stopping all over the little guy's the invisible

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hand is what keeps surpluses and shortages from happening For

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example the fake mustache market Yes there's a market for

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that where the mustache supply curve crosses with the mustache

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demand curve And that's where mustache equilibrium is that drop

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a plumb line down from equilibrium to see the equilibrium

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Quantity of moustache is likewise You can see the equilibrium

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price where the supply and demand curves cross on the

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left hand side of graft In our perfectly competitive mustache

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market the amount of moustache is sold in the price

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they're soul That is capitalism's invisible hand at work When

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suppliers try to sell their fake mustache is at too

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high a price Consumers will Balkh They'll think it's a

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rip off and go buy somewhere else instead Leaving cellars

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with a surplus of fake mustache is Remember the mustache

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market has many mustache suppliers all competing against one another

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well because consumers will flock to the mustache supplier with

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the best value like best prices in this case since

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it's all the same moustache Will this keep suppliers from

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holding the fake mustache market hostage Many mustache The buyers

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competing for the dollars of mustache buyers will naturally drive

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prices down if they're too high Well the invisible hand

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smacks mustache suppliers upside the head making suppliers realized they

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should drop their price if they want to sell some

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moustache is but they don't want to make the price

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too low because well if suppliers dropped the price of

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a fake moustache is too low Well there will be

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a mustache shortage in a while We can't have that

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right The moustache will be super cheap Everyone rushed to

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buy one and there won't be an in store and

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people be cranky Yes when there's a shortage of moustache

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is there's an ugliness Not even the best fake mustache

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could cover up Consumers will be at each other's throats

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Fighting over fake moustache is like it's Black Friday or

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something like that When they're all sold out consumers will

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be demanding Mauritz just too good of a deal So

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in the case of a moustache shortage the invisible hand

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will be smacking mustache suppliers upside the head again making

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the supplier realized they could be making more money if

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they sold more Mustache is and at a higher price

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Well after competitive suppliers get some wise guidance from the

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smack smack invisible hand We get market equilibrium Just like

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Goldilocks The invisible hand says Uh not too much not 00:03:08.503 --> [endTime] too little but just right Yeah

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