Economics 101 (#8) Market Equilibrium

To understand basic economics means understanding how supply and demand interact. Although in real world terms its difficult to measure, in theory the optimal (equilibrium) price and quantity demanded is found by seeing where these two curves meet. But these curves move, as you saw in #6 and #7. Putting #6 and #7 together…lets look at some graphs and then talk about equilibrium price and quantities.

Heres the PDF  PIIGSTY Econ 101 #8 Market Equilibrium

First, the basic interaction of supply and demand. If supply exceeds demand, there is excess supply (@ Price =P1). If demand exceeds supply, there is  excess demand (@ Price = P2)

Now, lets look at the interaction between demand and supply and show how changes in both can change the optimal/equilibrium price and quantity in the marketplace for Good X.


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