Economists use the term equilibrium to describe the balance between supply and demand in the marketplace. Under ideal market conditions, price tends to settle within a stable range when output satisfies customer demand for that good or service. Equilibrium is vulnerable to both internal and external influences. The appearance of a new product that disrupts the marketplace, such as the iPhone, is one example of an internal influence. The collapse of the real estate market as part of the Great Recession is an example of an external influence. Oftentimes, economists must churn through massive amounts of data in order to solve equilibrium equations. This step-by-step guide will walk you through the basics of solving such problems. The equilibrium price and quantity in a market is located at the intersection of the market supply curve and the market demand curve. While it is helpful to see this graphically, it’s also important to be able to solve mathematically for the equilibrium price P* and the equilibrium quantity Q* when given specific supply and demand curves. The supply curve slopes upwards (since the coefficient on P in the supply curve is greater than zero) and the demand curve slopes downwards (since the coefficient on P in the demand curve is greater than zero). The equilibrium in a market occurs where the quantity supplied in that market is equal to the quantity demanded in that market. Therefore, we can find the equilibrium by setting supply and demand equal to one another and then solving for P. In addition, we know that​ in a basic market the price that the consumer pays for a good is the same as the price that the producer gets to keep for the good. Therefore, the P in the supply curve has to be the same as the P in the demand curve. Since the P* and Q* represent the condition where quantity supplied and quantity demanded are the same at a given price, it is, in fact, the case that P* and Q* graphically represent the intersection of the supply and demand curves. It is often helpful to compare the equilibrium that you found algebraically to the graphical solution in order to double check that no calculation errors were made.