What is equilibrium?

Equilibrium is the condition in which the pushes and pulls on a system cancel out and nothing changes without a new shock. In a market it is the price where the quantity people want to buy equals the quantity sellers want to sell. It matters because it tells you where a system tends to settle, and how far a change will move it.

How it works

Equilibrium is held in place by feedback. If the system drifts away from the balance point, forces appear that push it back, which is called stable equilibrium. In an unstable equilibrium, a small nudge grows and the system runs away from the point instead.

Reaching equilibrium takes time, and delays can make a system overshoot and oscillate around the balance point before settling. A shock such as a new cost, a policy or a change in preferences shifts the balance point and starts the adjustment again.

Example

Say a city has a rental market where demand falls as rent rises and supply grows as rent rises. At a rent of 1,000, 900 tenants want a flat but only 700 are offered, so rents rise. At 1,200, 800 want a flat and 800 are offered, so the market clears. The balance point is 1,200. If a new employer brings 100 more tenants at every rent, the shortage returns and rents climb until more flats are built or the new balance sits higher. Illustrative numbers only.

In a game economy, equilibrium is the point where currency created by rewards equals currency removed by sinks, so the average player balance stops drifting up or down.

How to model it in Machinations

Draw a Pool for the quantity that adjusts, a Source feeding it and a Drain removing it, then link a State connection so that the fuller the Pool, the lower the inflow or the higher the outflow. Play and chart the Pool: it should settle at a level. Change a rate as a Lever and watch the level move.