Market equilibrium is defined as a price at which both of the parties producers and consumers are agreed to exchange when both producer and consumer interact with each other in the market.And as a result both of them tries to react differently. The consumers wants more things at lower prices .But producer look forward to supplying more at higher prices.
Ex:- imagine you are a consumer .you went to a vegetable market and wanted to buy tomato.That's wht you Bargen with the shopkeeper to give you at low price but he denied by saying i will only sold it with this price .Here the price by the producer must be higher than the asked price.
Market clearing price:-
This is the price at which both consumers and producers are agreed to exchange is called market clearing price or market equilibriums and this is the point at which producer are agreed to supply the exact amount of quantity what consumer demands as per his requirement.
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