Slides
Beta: checked automatically; a teacher review is coming.
Read mode: this lesson has no narration yet.
Part 1 — equilibrium, the gaps away from it, and the effect of a shift of demand or supply.
In this lesson you will
The equilibrium price is the price at which quantity demanded equals quantity supplied. The quantity traded at that price is the equilibrium quantity.
| Term | Meaning |
|---|---|
| Equilibrium price | The price at which quantity demanded equals quantity supplied |
| Equilibrium quantity | The quantity bought and sold at the equilibrium price |
| Market clearing | No buyer who wishes to buy at that price is turned away, and no seller is left with unsold stock |
| Setting of this part | A perfectly competitive market with a fixed number of firms |
Compare quantity demanded and quantity supplied at each price. The gap shows which way the price will move.
| Price (Rs per kg) | Quantity demanded | Quantity supplied | Excess demand (+) or supply (−) | Pressure on price |
|---|---|---|---|---|
| 10 | 150 | 60 | +90 | Price rises |
| 15 | 125 | 80 | +45 | Price rises |
| 20 | 100 | 100 | 0 | None: equilibrium |
| 25 | 75 | 120 | −45 | Price falls |
| 30 | 50 | 140 | −90 | Price falls |
Essential cookies keep the site working. With your OK we also use cookieless analytics. Cookie policy
