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Markets are made up of sellers and buyers. Sellers have a supply of goods, and buyers have a supply of money. If the price is right, a seller and a buyer agree to make a trade. The amount of buyer interest that exists at a specific price level is called the demand.
Equilibrium: Where Supply Meets Demand. Equilibrium is the point where the quantity demanded equals the quantity supplied. This means that there's no surplus of goods and no shortage of goods. A shortage occurs when demand is greater than supply â in other words, when the price is too low.