ECON-2110 Lecture Notes - Lecture 6: Economic Equilibrium, Demand Curve
17 Sep 2016
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Chapter 4- equilibrium: how supply and demand determine prices. When qs = qd at a certain price, the market is in equilibrium, The amount consumers would purchase at this price is matched exactly by the amount producers wish to sell. There is only one price where qs = qd. Free markets always move toward equilibrium price. Supply and demand curve intersect at 1 point, known as equilibrium price/quantity. How markets find equilibrium when price is too high. At a price of , a surplus of 10 energy drinks (25-15) exists, supplies are left with stock on the shelves - they take action to get the surplus sold and raise revenue. When markets find equilibrium when price is too low. Gd > gs which is a shortage. At a price of , a shortage of 10 energy drinks (25-15) exists, buyers compete with each other for purchases, sellers see their chance to raise price and revenue.
