Market price

Definition

The market price for a good, also termed its market-clearing price, equilibrium price, or the price at which it clears the market, is the price at which the demand for the good equals the supply of the good. The market price of a good depends on all the factors that influence the demand curve for the good as well as all the factors that influence the supply curve for the good.

When the price of a good exceeds the market price, supply exceeds demand. This is a situation of excess supply, or surplus. When the price of a good is less than the market price, demand exceeds supply. This is a situation of excess demand, or scarcity.