MARKET EQUILIBRIUM & MARKET CLEARING PRICE

Market equilibrium is defined as price at which both of the parties producer and consumer 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 reach differently. The consumer wants more things at lower prices . but producer look forward to supplying more at higher price

Ex: you went to a vegetable market and wanted to buy tomato. That’s why you bargain with the shopkeeper to give u at low price but he denied by saying I will only sell it with this price. Here the price by the producer must be greater than the asking price .

Market clearing price

This is the price at which both consumer and producer are agreed to exchange is called market clearing price .at this point producer are agreed to supply the exact amount  of quantity what costumer demand.