# Market Equilibrium Notes, Class 11 Economics | SwaVid Market Equilibrium, NCERT Class 11 Economics: notes with key ideas, definitions, common mistakes and 3 quick checks with worked answers. Canonical: https://www.swavid.com/cbse/class-11/economics/chapter/market-equilibrium Source: https://www.swavid.com/cbse/class-11/economics/chapter/market-equilibrium # Market Equilibrium ## Definitions, formats and formulas ## Key ideas ## Common mistakes ## Quick checks ## Keep going ## Questions parents ask ## Class 11 Economics on SwaVid ### Equilibrium, excess demand and supply ### Equilibrium with fixed number of firms ### Shifts in demand and supply ### Simultaneous shifts ### Equilibrium with free entry and exit ### Price ceiling and price floor ### Related chapter ### Related chapter ### All chapters SwaVid › CBSE › Class 11 › Economics › Market Equilibrium Notes written by SwaVid from the NCERT textbook. Class 11 Economics, Chapter 5. Key ideas, definitions and common mistakes. CBSE does not print marks for a single chapter. Short answer. This chapter examines how the interaction of market demand and market supply determines the equilibrium price and quantity under perfect competition. It also analyses shifts in demand and supply curves along with government interventions like price ceilings and price floors. Source: NCERT Introductory Microeconomics (Reprint 2026-27) , Chapter 5, Market Equilibrium Market equilibrium occurs where market demand equals market supply. If the market price is below equilibrium, demand exceeds supply, leading to excess demand. If the price is above equilibrium, supply exceeds demand, resulting in excess supply. When the number of firms is fixed, the equilibrium price and output are determined at the intersection of the downward-sloping market demand curve and the upward-sloping market supply curve. Any imbalance sets off price adjustments until demand and supply balance. A rightward shift in demand raises both equilibrium price and quantity, while a leftward shift lowers both. A rightward shift in supply lowers the equilibrium price and increases quantity, while a leftward shift raises the price and reduces quantity. When both curves shift at the same time, the effect on price and quantity depends on the relative magnitudes of the shifts. For instance, an equal rightward shift in both demand and supply increases equilibrium quantity while keeping the equilibrium price unchanged. With free entry and exit, firms earn zero abnormal profit in the long run. The equilibrium price is fixed at the minimum point of the average cost curve, and market demand determines the equilibrium quantity and the number of operating firms. A price ceiling is a legally imposed maximum price below equilibrium, which protects consumers but leads to excess demand and rationing. A price floor is a legally imposed minimum price above equilibrium, which protects producers, such as farmers, but creates excess supply. Try each question first. Then tap it to see the answer. Equate demand and supply: 200 - 10p = 50 + 15p Combine like terms: 25p = 150, so p = 150 / 25 = 6 Substitute p = 6 into demand: q = 200 - 10(6) = 140 Price = ₹6, Quantity = 140 units Calculate q D at p = 15: q D = 100 - 2(15) = 70 units Calculate q S at p = 15: q S = 20 + 2(15) = 50 units Compare: q D - q S = 70 - 50 = 20 units Excess demand of 20 units Equilibrium price p = min AC = ₹20 Total quantity demanded q₀ = 500 - 10(20) = 300 units Number of firms n = q₀ / q f = 300 / 5 = 60 60 firms Theory of Consumer Behaviour . The Theory of the Firm under Perfect Competition . The 13 chapters of Class 11 Economics . CBSE does not give marks to one chapter. It prints marks for units or parts, and the chapter list page shows them all. No. They are written by SwaVid from the NCERT textbook. The CBSE curriculum is the reference for what is assessed. This is the last chapter in the NCERT books for Class 11 Economics. SwaVid is an AI tutor for Indian students in Classes 6 to 12. It finds the earlier ideas a child missed, then teaches today’s chapter. Start free to see how it works. - Ch 5 NCERT book - 80 marks, theory paper - 3 quick checks - Thinking a price ceiling is set above the equilibrium price because 'ceiling' means high . Remember that a price ceiling is an upper legal limit designed to keep prices affordable for consumers, so it must be set below the equilibrium price to have any effect. - Assuming equilibrium price always changes when both demand and supply shift . If demand and supply shift in the same direction by the exact same proportion, the equilibrium price remains unchanged while the equilibrium quantity changes. - Confusing excess supply with inventory shortage . Excess supply means quantity supplied is greater than quantity demanded at the given price, which creates unsold stocks or a surplus, not a shortage. ## Key Links - [CBSE](https://www.swavid.com/cbse) - [Class 11](https://www.swavid.com/cbse/class-11) - [Economics](https://www.swavid.com/cbse/class-11/economics/chapters) - [Start free →](https://www.swavid.com/signup) - [All 13 chapters](https://www.swavid.com/cbse/class-11/economics/chapters) - [NCERT Introductory Microeconomics (Reprint 2026-27)](https://ncert.nic.in/textbook.php) - [Open notes](https://www.swavid.com/cbse/class-11/economics/chapter/theory-of-consumer-behaviour) - [Open notes](https://www.swavid.com/cbse/class-11/economics/chapter/the-theory-of-the-firm-under-perfect-competition) - [Class 11 Economics](https://www.swavid.com/cbse/class-11/economics/chapters) - [Start free →](https://www.swavid.com/signup)