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Buyers want to buy as many goods as possible, as cheaply as possible. Sellers want to sell as many goods as possible, at the highest price possible. This tug-of-war between demand and supply typically results in a compromise: a price at which buyers are willing to buy the same number of goods that sellers are willing to sell. This point is called market equilibrium, and the price and quantity are called the equilibrium price (or sometimes the market-clearing price) and the equilibrium quantity. To see how this works, we will once again start with the graphical approach and then turn to the algebraic one.
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