Equilibrium is an important part of Economics also known as Equilibrium Analysis. It signifies a state of rest or balance. Equilibrium , in Economics, means as professor, JK Mehta says "equilibrium denotes in economics, absence of change in movement while in physical sciences it denotes absence of movement itself.
Stable, unstable and neutral equilibrium.
Equilibrium can be stable neutral and unstable. As professor AC Pigou summarised ;"a system is in stable equilibrium if when any small disturbance takes place forces come into play to re-establish the initial position.
It is Neutral equilibrium, if when such a disturbance takes place, no re-establishing forces but it also know for the disturbing forces are evolved, so that the system remains at rest in the position to which it has moved; and it is unstable equilibrium if the small disturbance calls out for the disturbing forces which act in a cumulative manner to drive the system from its initial position".
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