Balance

economic-dictionary

Equilibrium is a state in which the balance between two or more forces or situations has been achieved. It is a very broad term, which can be applied to physics, economics, politics, and even everyday life.

The balance is, in simple, a circumstance of harmony, in a certain physical space, or it can even occur inside a person.

It can be said that equilibrium results from the interaction of several elements, which offer a result where no greater variation is expected.

Types of balance

We can distinguish the following types of equilibrium in economics and business sciences:

  • Financial balance: It is a situation in which a company is able to face all its debts in the agreed terms. Thus, it shows that its management is efficient.
  • Market equilibrium: It is a situation that occurs when, at the prices offered by the market, those people who buy or consume a good or service can acquire the quantities they want. Also, those who offer that good or service, can sell all their stocks.
  • Equilibrium of the money market: It occurs as a consequence of the crossing of the money supply with the money demand. As a result of this equivalence, we will obtain the optimal level of interest rates in the short term.
  • Consumer equilibrium: It is that point at which a consumer finds its greatest utility for a given price and income.
  • Producer equilibrium: It is one where the company produces the quantity that will allow it to maximize its profits, given certain costs.
  • Macroeconomic equilibrium: When the market presents an equality between aggregate demand and aggregate supply.

Other types of balance

The concept of equilibrium, outside the economic sphere, can be applied in the following areas:

  • In physics: When two opposing forces compensate each other. For example, let's imagine we have a glass on a table. Person A pushes it to the front, where person B is, who is also pushing the glass, but in the opposite direction. Assuming both individuals apply the same force, the glass will not move.
  • In politics: Reference is made to the balance of powers when there is a balance between the different powers of the State (executive, legislative and judicial). Thus, there is not one that dominates or has more importance or interference than the other.
  • Emotional balance: It means that a person is in good mental health and remains in harmony with the environment around him.
  • Equilibrioception: It is that sense that allows humans and animals to walk without falling. This ability is developed to the maximum by tightrope walkers, for example.

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