A state in which forces making for change in opposing directions are perfectly in balance, so that there is no tendency to change. For example, a market will be in equilibrium if the quantities of the product which buyers want to buy at the prevailing price is exactly matched by the amount which seilers wish to seil. If this were not so, then the price would be changing as buyers try to buy more of a good than is in fact available or seilers try to seil more of a good than buyers are prepared to accept at prevailing prices. In this case, price is the equilibriating mechanism. The concept of equilibrium is a very general one, which can be applied to any situation which is characterized by a set of interacting forces.
|Reference: The Penguin Dictionary of Economics, 3rd edt.|