How is the equilibrium price determined? What happens if the price is above the equilibrium price? What happens if the price is below the equilibrium price?

What will be an ideal response?

The equilibrium price is determined by the point where the demand curve and the supply curve intersect. At this point, quantity demanded and quantity supplied are equal. At a price greater than the equilibrium price there is an excess quantity supplied, or surplus since an increase in price leads to a reduction in the quantity demanded but an increase in quantity supplied. At a price below the equilibrium price there is an excess quantity demanded or shortage.