Sample Essay

Have you seen a graph representing the demand and supply lines?  The point at which the demand and supply lines intersect each other is called the equilibrium point.  Once can also say that the level at which demand and supply are equal is called equilibrium. The economic equilibrium modifies the price of a product and quantity consumed. Both these factors are inversely proportional to each other in majority of the scenarios. People would not purchase a product if it is costly because every buyer wants to spend the minimum price for the best commodity.

A decrease in price is witnessed when there is there is a drop in in the demand rate. When people stop buying a commodity, the firm has to drop the price so that the purchase proportion is maintained. In addition to that, the price is also decreased so that people do not look for substitutes. This is a common issue for a lot of companies.  When a consumer looks for alternate options, he does not return to the previous product which he was using initially and the company loses him.

It is very important to maintain each change in the equilibrium position. This is exactly what economists are paid for. They make sensible predictions so that their products maintain dominant positions in the market.  Do external factors affect the equilibrium position?  It basically depends on the scale of economy.  External factors are active on a macroeconomic scale.

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