Short Answer 
Equilibrium in economics occurs when quantity demanded equals quantity supplied, indicating market balance. The equilibrium point is identified on a graph where the supply and demand curves intersect, and the price line ‘P’ denotes the equilibrium price, representing market stability.
Step 1: Understand Equilibrium in Economics
In economics, equilibrium refers to the state where quantity demanded equals quantity supplied. This means that the market is balanced, and neither a surplus nor a shortage exists. Recognizing this balance is essential for understanding how prices are determined in a market economy.
Step 2: Identify the Equilibrium Point on the Graph
The equilibrium point is found where the supply and demand curves intersect. In this case, the intersection occurs at the point (30, 9). Here, ’30’ represents the quantity and ‘9’ represents the price. This point indicates the exact price at which the market functions efficiently.
Step 3: Interpret the Price Line ‘P’
The line labeled ‘P’ in the graph signifies the equilibrium price. By drawing this line vertically to intersect the y-axis at the equilibrium point, it illustrates the price level where the number of goods supplied matches the number of goods demanded. Thus, ‘P’ visually represents market stability.