Market equilibrium is also known as market clearing price, it refers to perfect balance in the market supply and demand, that is market equilibrium means when supply is equal to demand.

When the market is at equilibrium the price of product will remain same unless some external factors change the level of supply or demand.

According to market economy, there is a single price which brings demand and supply in to balance called the equilibrium price.

Therefore market equilibrium is a situation in which supply of an item is exactly equal to its demand. Since there is neither surplus nor shortage in the market, the price tends to remain stable in this situation.

Here, S is the supply curve and D is the demand curve, they intersect at price E, which is the equilibrium price.