Full employment equilibrium is an equilibrium state where all the available resources are fully (efficiently) utilized ; It’s a classical concept. To the Classical, there is always full employment in the economy consequent upon wage price flexibility and the Say’s law of market. If any disequilibrium takes place, it is a short run phenomenon and will be corrected automatically by the price mechanism.
Diagrammatically –
E = Equilibrium point
OP = Equilibrium price
OQ = Equilibrium output at full employment.
