There are strong pressures within markets that push prices and quantities toward their equilibrium levels. To see why, suppose that the market price is above the equilibrium price, such as PHI in Figure 3.2. At this higher price, there is a surplus of PCs—suppliers produce more PCs than consumers are willing to purchase. As inventories of unsold PCs build, this surplus places downward pressure on prices as suppliers compete to try to sell their products. As prices fall, fewer PCs will be produced and more will be demanded, thus reducing the surplus. In contrast, if the price is below the market-clearing price, such as P LO in Figure 3.2, inventories dwindle and back orders accumulate—there is a shortage of computers. Here, consumers will bid up the price of PCs as they compete for the limited supply. As prices rise, producers increase their output and consumers demand fewer PCs, thus reducing the shortage. When the mar- ket is in equilibrium, there is no pressure on prices and quantities—the quantity demanded exactly equals the quantity supplied. Inventories are stable at their desired levels, and the market price is stable at this point.