general equilibrium

General equilibrium is a concept in economics that describes how all markets in an economy—such as those for goods, services, and resources—interact simultaneously. It shows how supply and demand in one market affect others, leading to a state where everything balances out; prices and quantities are such that everything consumers want to buy matches what producers want to sell. In this state, resources are allocated efficiently across the entire economy, and no market has the incentive to change its prices or output levels. It helps us understand the overall functioning and stability of an economic system.