ECO10004 Lecture Notes - Lecture 1: Economic Equilibrium, Harris Scarfe, Margarine
Document Summary
At equilibrium, the quantity demanded exactly equals the quantity supplied for a given period. There is neither a market glut nor a market shortage. Competitive market equilibrium: market equilibrium with many buyers and many sellers. The effects and changes in supply and demand on e prices and quantity traded: Disequilibrium: a point where the forces of demand and supply are out of balance. This will cause changes in the equilibrium price and supply. At the e price, there is no excess supply or demand: at all other prices, other than equilibrium there is a shortage or a surplus. Movement from disequilibrium to equilibrium: the market will always have a natural tendency to move towards equilibrium, when price is above e, market pressures will drive price back down (vice versa) We already know that the quantity of a good or service demanded or supplied either expands or contracts when there is a change in its price.
