Market equilibrium

0
10K

Key points

  • Supply and demand curves intersect at the equilibrium price. This is the price at which we would predict the market will operate.

Where demand and supply intersect

Because the graphs for demand and supply curves both have price on the vertical axis and quantity on the horizontal axis, the demand curve and supply curve for a particular good or service can appear on the same graph. Together, demand and supply determine the price and the quantity that will be bought and sold in a market.
We can find the equilibrium price by looking at a table.
Price per gallon Quantity supplied in millions of gallons Quantity demanded in millions of gallons
The equilibrium price is the only price where the plans of consumers and the plans of producers agree—that is, where the amount consumers want to buy of the product, quantity demanded, is equal to the amount producers want to sell, quantity supplied. This common quantity is called the equilibrium quantity. At any other price, the quantity demanded does not equal the quantity supplied, so the market is not in equilibrium at that price.
The word equilibrium means balance. If a market is at its equilibrium price and quantity, then it has no reason to move away from that point. However, if a market is not at equilibrium, then economic pressures arise to move the market toward the equilibrium price and the equilibrium quantity.
Check out this video to see a discussion of how the interaction between supply and demand leads to an equilibrium price.
Buscar
Categorías
Read More
Bocce
The Timeless Appeal of Bocce: A Game of Skill, Strategy, and Social Connection
In the realm of leisurely outdoor activities, few games blend simplicity with strategic depth as...
By Dacey Rankins 2024-06-17 18:49:35 0 14K
Financial Services
Elasticity in areas other than price
Key points Elasticity is a general term, referring to percentage change of one...
By Mark Lorenzo 2023-07-07 20:37:00 0 10K
Philosophy
What is philosophy?
Life, science and culture in general require from us and, above all, from young people,...
By FWhoop Xelqua 2023-01-12 15:20:55 0 15K
Жизненные вопросы
Жить. Ikiru. (1952)
Старик узнаёт, что жить ему осталось недолго и решает, что детская площадка на месте зловонного...
By Nikolai Pokryshkin 2023-01-19 11:36:02 0 22K
Социальные проблемы
Великий диктатор. The Great Dictator. (1940)
Главный герой фильма, еврейский цирюльник, сражается в рядах армии своего государства Томании....
By Nikolai Pokryshkin 2022-12-19 17:41:28 0 25K
image/svg+xml


BigMoney.VIP Powered by Hosting Pokrov