Market Equilibrium occurs where quantity demanded equals quantity supplied at a specific price (equilibrium price). At this point: There's no pressure for price change; Both consumers and producers are satisfied. Graphically: Intersection of demand and supply curves. Equilibrium price: Where Qd = Qs. Equilibrium quantity: The amount bought and sold at this price. Shortage: When price is below equilibrium, Qd > Qs. Surplus: When price is above equilibrium, Qs > Qd. Market mechanism: Shortage drives price up toward equilibrium; Surplus drives price down toward equilibrium (self-correcting). Shifts: Changes in demand or supply shift equilibrium. Comparative statics: New equilibrium after shifts analyzed by comparing old vs. new. Real example: Petrol prices reach equilibrium where demand matches refinery supply. Indian market: GST implementation shifted equilibrium in many markets. ICAI tests: Finding equilibrium, interpreting shortages/surpluses, analyzing shifts. Exam tip: At equilibrium, there's no tendency for change; any disequilibrium is temporary as market self-corrects.