Equilibrium price is where quantity supplied equals quantity demanded.

Evidence

Although the concept of “equilibrium” is complex, a simple notion of “equilibrium price” is the price at which the quantity of a commodity that suppliers will sell is equal to the quantity that buyers will purchase. If the market price is below that equilibrium level, there is excess demand: purchasers want to buy more than suppliers will sell, allowing the latter to raise prices. If the price is above equilibrium, there is excess supply: purchasers will not buy the full amount that suppliers want to sell, forcing the latter to lower their prices in order to clear their stocks. — Donald MacKenzie, An Engine, Not a Camera, 235

Categorization

• DEFINE: Establishes the textbook supply-demand equilibrium definition Sharpe’s model presupposes.