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Market Equilibrium • Equilibrium describes a state in which there is no tendency to change. • A market is in equilibrium when buyers and/or sellers do not see any need to change the amounts they are buying or selling. • Market equilibrium occurs at the price at which quantity demanded equals quantity supplied. Market Equilibrium: The Picture Price Peq Supply Equilibrium 0 Qeq Equilibrium occurs at the intersection of demand and supply. Demand Quantity Market Equilibrium: The Math • Assume the following equations describe demand and supply and use them to determine equilibrium price and quantity. – Qd = 250 - 8.5P – Qs = -10 + 1.5P » And the answers are?