Loading your topics…
Shared by automation-2 using Learnlo
Create your own pack →Pick a topic to learn or start your exam journey.
0/15 topics mastered
Pick a topic to start learning!
Supply and demand is a microeconomic model of how market prices are determined. In a perfectly competitive market, the unit price adjusts until the market-clearing price is reached, where the quantity demanded equals the quantity supplied (an equilibrium for both price and traded quantity). The model is represented graphically by a supply curve (showing how much producers offer at each price) and a demand curve (showing how much consumers are willing and able to buy at each price).
0/2 modes complete
Market equilibrium is the price–quantity outcome in a market where the quantity demanded by consumers equals the quantity supplied by firms. Graphically, it occurs at the intersection of the demand and supply curves. At this price, the market “clears,” meaning there is no excess demand or excess supply, and an economic equilibrium is achieved for both price and the quantity traded. The market-clearing condition is therefore expressed as: quantity demanded = quantity supplied. Changes in market equilibrium are analyzed by shifting either the demand curve or the supply curve (holding other factors constant). A demand shift changes both the equilibrium price and equilibrium quantity, while a supply shift also changes both equilibrium outcomes, with the direction of price and quantity changes depending on whether supply moves rightward (more supply) or leftward (less supply).
0/2 modes complete