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The point where supply and demand intersect is the equilibrium point. This is the point where quantity demanded and quantity supplied are equal. The point where supply and demand intersect is the equilibrium point. This is the point where quantity demanded and quantity supplied are equal.
When an exchange occurs, the agreed upon price is called the equilibrium price, or a market clearing price . In figure 3, both buyers and sellers are willing to exchange the quantity Q at the price P. At this point supply and demand are in balance or equilibrium. At any price below P, the quantity demanded is greater than the quantity supplied. In this situation consumers would be anxious to acquire product the producer is unwilling to supply resulting in a product shortage.