How are equilibrium prices determined?

Equilibrium prices are determined by the intersection of supply and demand in a market. When the quantity of a good or service that consumers are willing to buy matches the quantity that producers are willing to sell at a particular price, the market reaches equilibrium. If demand exceeds supply, prices tend to rise, while if supply exceeds demand, prices tend to fall, pushing the market toward this equilibrium point. Thus, equilibrium prices reflect the balance between consumer preferences and producer costs.