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Equilibrium

ee-kwih-LIB-ree-um /ˌiːkwɪˈlɪbriəm/

nounC1GREGMATUPSC

FormalTechnical

A state in which opposing forces or influences are balanced, especially in economics, where supply and demand are equal and prices are stable.

Economic equilibrium is a theoretical ideal. Markets constantly move towards it, but rarely stay perfectly balanced due to changing conditions. It's a point of 'no tendency to change' unless external factors shift.

The story behind the word. The word 'equilibrium' comes from the Latin aequilibrium, a combination of aequus ('equal') and libra ('balance' or 'scale'). So, literally, it means 'equal balance.' This perfectly captures its economic meaning: a state where opposing forces, like supply and demand, are perfectly balanced, leading to a stable price and quantity.

Word relationships

balance: 'Balance' is a general state of stability, while 'equilibrium' in economics refers to a specific state where opposing market forces are equal.
stability: 'Stability' is the quality of being firm and unchanging, which is a characteristic of equilibrium, but 'equilibrium' defines the specific conditions leading to that stability.

disequilibrium: A state of imbalance, where opposing forces are not equal, leading to a tendency for change.
instability: The quality of being prone to change or disruption.

Commonly confused with

stagnation: 'Stagnation' implies a lack of growth or activity, which might occur at equilibrium but isn't the definition of equilibrium itself.

Collocations

market equilibrium
general equilibrium
Nash equilibrium
stable equilibrium
disequilibrium

Example sentences

"The market reaches equilibrium when the quantity of goods supplied exactly matches the quantity demanded at a specific price." Explaining market dynamics.
"After a period of intense competition, the industry settled into a new competitive equilibrium." Discussing a stable system.

Memory hook

Think of an 'EQUAL-LIBRA-rium' where everything is equally balanced, like a scale (libra) with equal weights. EQUILIBRIUM = Equal Balance

When not to use

While 'equilibrium' can be used in a general sense of balance, in economics, it has a precise meaning related to market forces (supply and demand) or a stable state in a system.

Fun facts

The concept of general equilibrium, where all markets in an economy are simultaneously in equilibrium, was pioneered by Léon Walras.