At what point do demand and supply equal each other?

Demand and supply equal each other at the equilibrium price. This is the point at which the quantity of goods that consumers are willing to purchase matches the quantity that producers are willing to sell. At this price, there is neither a surplus nor a shortage in the market; instead, the market is in a state of balance.

When market prices are above the equilibrium price, a surplus occurs because the quantity supplied exceeds the quantity demanded, leading to downward pressure on prices. Conversely, when prices are below the equilibrium price, a shortage occurs because the quantity demanded exceeds the quantity supplied, causing upward pressure on prices. The equilibrium price is a critical concept in economic theory as it indicates the optimal pricing mechanism for resource allocation in a free market.