2.3 Market Equilibrium, Disequilibrium, and Changes in Equilibrium

• What is the condition for market equilibrium?

  Quantity demanded equals quantity supplied
• At market equilibrium, there is no surplus or shortage
• The equilibrium price is the price at which quantity demanded equals quantity supplied.
• What are examples of market forces that can shift supply and demand curves?

  Consumer preferences, technology, input costs
• Changes in market forces lead to new equilibrium prices and quantities
• Steps to identify market equilibrium on a graph

  1️⃣ Draw the supply and demand curves

  2️⃣ Find the point where the curves intersect

  3️⃣ Identify the equilibrium price

  4️⃣ Identify the equilibrium quantity
• What is the equilibrium price also known as?

  Market-clearing price
• Stable market conditions mean there is no surplus or shortage.
• Match the market equilibrium conditions with their descriptions:

  Equilibrium Price ↔️ Price where quantity demanded equals quantity supplied

  Equilibrium Quantity ↔️ Quantity of goods exchanged at equilibrium price

  Balance of Supply & Demand ↔️ $Q_{d} =$$Q_{s}$

  Stable Market ↔️ No surplus or shortage
• Market disequilibrium occurs when quantity demanded does not equal quantity supplied
• What is a surplus in market disequilibrium?

  Quantity supplied exceeds quantity demanded
• A surplus in market disequilibrium causes the market price to decrease.
• What is a shortage in market disequilibrium?

  Quantity demanded exceeds quantity supplied
• A shortage in market disequilibrium leads to an increase in the market price
• At market equilibrium, the market clears without a surplus or shortage.
• Market equilibrium is the state where quantity demanded equals quantity supplied
• Steps for a market to move from disequilibrium to equilibrium

  1️⃣ Identify the type of disequilibrium (surplus or shortage)

  2️⃣ Adjust the price based on market forces

  3️⃣ Quantity demanded and supplied change

  4️⃣ Equilibrium is reached when $Q_{d} =$$Q_{s}$
• What is the equilibrium price defined as?

  Price at which quantity demanded equals quantity supplied
• A surplus occurs when quantity supplied exceeds quantity demanded
• A shortage occurs when quantity demanded exceeds quantity supplied.
• What is the effect of a surplus on the market price?

  Price decreases
• A shortage in the market leads to an increase in the market price
• Match the market conditions with their effects on price:

  Surplus ↔️ Downward pressure on price

  Shortage ↔️ Upward pressure on price
• What happens to the price when a surplus exists in the market?

  Decreases
• A shortage in the market leads to an increase in the market price
• Market forces always push the market towards equilibrium.
• What action does the market take when a surplus exists to move towards equilibrium?

  Price decreases
• A shortage in the market leads to an increase in the market price
• Match the market conditions with their adjustments:

  Surplus ↔️ Price decreases, reduces $Q_{s}$, increases $Q_{d}$

  Shortage ↔️ Price increases, increases $Q_{s}$, reduces $Q_{d}$
• What is the equilibrium price in a market?

  Price where quantity demanded equals quantity supplied
• The equilibrium price is the price at which $Q_{d} =$$Q_{s}$.
• The equilibrium quantity is the quantity exchanged at the equilibrium price
• What is an example of a market equilibrium condition?

  Equilibrium price for apples is $2 per pound
• What does the term 'Quantity Demanded' refer to in economics?

  Consumers' willingness to purchase
• The equilibrium price is the price where the quantity demanded equals the quantity supplied
• Market equilibrium occurs when the quantity demanded equals the quantity supplied at a given price
• What is the equilibrium quantity in a market?

  Quantity exchanged at $P_{e}$
• The equilibrium price is the price where the quantity demanded equals the quantity supplied
• Conditions for market equilibrium

  1️⃣ Equilibrium Price

  2️⃣ Equilibrium Quantity

  3️⃣ Balance of Supply & Demand ($Q_{d} =$$Q_{s}$)

  4️⃣ Stable Market
• When does market disequilibrium occur?

  $Q_{d} \neq Q_{s}$