A common example of a stable equilibrium in the study of economics is a market equilibrium. Should the equilibrium be disrupted, the market returns to equilibrium.

The process works like this:

• A demand determinant or supply determinant changes, which shifts the corresponding demand curve or supply curve.


• This change disrupts the equilibrium, creating either a shortage or surplus.


• Prompted by the imbalance in the market, the price changes, which causes changes in quantity demanded and quantity supplied.


• The quantity changes eliminate the shortage or surplus and restores equilibrium balance in the market.

• Shortage: A shortage arises if the market price is below the equilibrium price. The quantity demanded exceeds the quantity supplied. The shortage then prompts the price to rise. Buyers, who are unable to buy as much of the good as they want, bid the price higher. A higher price is exactly the remedy needed. The price rise causes a decrease in the quantity demanded (according to the law of demand) and an increase in the quantity supplied (according to the law of supply). Both changes in quantity act to reduce and eventually eliminate the shortage, thus restoring equilibrium.


• Surplus: A surplus arises if the market price is above the equilibrium price. The quantity supplied exceeds the quantity demanded. The surplus then prompts the price to fall. Sellers, who are unable to sell as much of the good as they want, force the price lower. A lower price is exactly the remedy needed. The price decline causes an increase in the quantity demanded (according to the law of demand) and a decrease in the quantity supplied (according to the law of supply). Both changes in quantity act to reduce and eventually eliminate the surplus, thus restoring equilibrium.