Business chart

When the market is working perfectly and everyone is aware exactly how much is going to be supplied at a given price, and how much is going to be demanded at that given price, then an equilibrium is met at point (Pe,Qe) and it is assumed that the quantity that has been supplied is demanded in an equal amount. The price at which supply and demand meet is also known as the market clearing price, which means that every unit that is being sold will be sold because there is enough demand for the product to sell everything.

Price (£)        Quantity Demanded        Quantity supplied 0.20                        270                              30 0.30                        240                              60 0.40                        210                              90 0.50                        180                              120 0.60                        150                              150 0.70                        120                              180 0.80                         90                               210 0.90                         60                               240 1.00                         30                               270

They then looked at this data and noticed that when the price was £0.60, there was enough supply to satisfy the demand for the product. The table can be plotted on a graph to help visualise the equilibrium

Supply and Demand