Explain the market equilibrium below using economic terminology, economic logic, and economic reasoning

MARKET EQUILIBRIUM

Left to themselves, most markets will eventually reach amarket equilibrium, where the quantity supplied and the quantity demanded are equal. Prices move up or down, buyers change the quantity they demand, and sellers adjust the quantity they supply. True, the process of adjustment may be stop-and-go (prices may go up and down and then up again), and it may take a long time, perhaps years. Consumers and businesses get accustomed to their routines and the way they've done things in the past, and change is difficult. Yet one of the truly distinguishing features of a market economy is that eventually the forces of supply and demand are enough to overcome such inertia and restore the balance.

The price at which the quantity supplied equals the quantity demanded is theequilibrium price. At the equilibrium price, there's a match between how much buyers want and how much sellers are willing to supply: theequilibrium quantity, which is the quantity supplied and demanded at the market price. For example, the market for hotel rooms would be at equilibrium if all hotel rooms were filled, but there were no potential guests standing outside in the cold with no place to sleep.

In the real world, few markets are exactly at the equilibrium price. There might be some excess demand or some excess supply. However, most markets, left to their own devices, will tend toward the equilibrium price that balances supply and demand. As a result, most markets either are near equilibrium or are trying to get there.

The Basic Supply-Demand Diagram

We can depict the market equilibrium by drawing the market supply and demand curves on the same graph. The price at which the two lines intersect is the equilibrium price. At that price, quantity supplied is equal to quantity demanded: the equilibrium quantity.

To make the idea of market equilibrium a bit more concrete, let's look at the market for new motor vehicles. We know that the demand curve for motor vehicles is downward-sloping because consumers will buy more cars, sport utility vehicles (SUVs), and other vehicles if they are less expensive. And the supply curve for vehicles is upward-sloping: If dealers can get more money for each car or SUV, manufacturers hire more workers, run the assembly lines longer, or bring in more vehicles from overseas.

You've likely seen electric scooters in many towns and cities these days-you may even use them yourself to get around. To use them, a mobile app is employed to unlock the scooter. As of January 2019, the typical price to unlock the scooter was $1, with a charge of $0.15 per minute of usage thereafter. Companies like Bird and Lyme pay workers to charge the scooters each night, and they replace damaged scooters.

On the demand side, you have alternatives to traveling by scooter: If the price per minute grows too high for you, you can instead walk, ride a bicycle, call a taxi, or travel by car. On the supply side, electric scooter companies are more likely to buy new scooters and fix broken ones if the rental price is higher. Both the quantity supplied and the quantity demanded of electric scooters are sensitive to price.

hypothetical market supply and demand schedules for the electric scooter market; the left column of the table lists the price per minute (assuming that the $1 unlock fee has already been paid). For any price, if you read across the table, the second column reports the quantity demanded at that price, and the third column reports the quantity supplied. For example, if the price per minute is $0.05, the market quantity demanded is 1,200 scooters and the market quantity supplied is 400. In other words, we have a situation of excess demand: More people want to ride the electric scooters than are available at the going price. But if the rental price is $0.30 per minute, the quantity demanded is 200 scooters and the amount supplied is 1,400 scooters, we have a situation of excess supply. The scooter companies are willing to make more scooters available at this price than potential riders are willing to pay for.

The equilibrium for this market, as for every market, occurs at the price where quantity demanded equals quantity supplied. For this example, the equilibrium price is $0.15 per minute, where both quantity supplied and quantity demanded equal 800 electric scooters.