Stable and Unstable Equilibrium
Premium
When the demand and quantity deviate from their equilibrium levels, the market forces will interact with each other to bring the price and quantity back to its equilibrium level. As long as this is possible the equilibrium is labelled as stable.
The equilibrium will be stable as long as the supply curve cuts through the demand curve from above, irrespective of whether the supply curve slopes upwards or downwards. The equilibrium will be stable in both the situations below:
Unlock Premium Content
Upgrade your account to access the full article, downloads, and exercises.
You'll get access to:
- Access complete tutorials and examples
- Download source code and resources
- Follow along with practical exercises
- Get in-depth explanations