Market Equilibrium

The common price from consumers (demand) and firms (supply) provides an equilibrium price.

Demand:

People/firms/government demand (willingness to buy) goods and services.

Demand Schedule:

A table showing how much of a good or service consumers will want to buy at different prices.

Demand Curve:

Is a graphical expression of the demand schedule.

Change in Quantity Demanded vs. a change in Demand:

Change in quantity demanded--same curve same data but a different price and quantity demanded combination.

Change in demand--new curve (shift) new data leads to a change in price.

*Determinants caused the change

Supply:

People/firms/government supply (produce) goods and services .

Supply Schedule:

A table showing how much of a good or service firms will want to produce at different prices.

Supply Curve:

A graphical expression of the supply schedule.

Change in Quantity Supplied vs. a change in Supply:

Change in quantity supplied--same curve same data but a different price and quantity supplied combination.

Change in supply--new curve (shift) new data leads to a change in price.

*Determinants caused the change

Understanding Demand:

Understanding Supply:

Equilibrium:

When the quantity demanded equal the quantity supplied an equilibrium price is established.

Competitive markets create a market price where there is no excess of the good and no shortage of the good.

Market Equilibrium

Understanding Equilibrium: