Chap7

• Equilibrium price


  The price where supply equals demand

  
• Equilibrium price


  • £30
• Equilibrium price


  • Consumers want to buy 3000 units (DEMAND) and suppliers want to sell 3000 units (SUPPLY)
  • No buyers left without goods and no sellers left with unsold goods
• Total revenue


  The amount of money generated from the sale of goods calculated by multiplying price by quantity
• Total revenue


  • £90,000 = £30 * 3,000
• Shifts in demand


  Equilibrium price will change if demand increases or decreases - shift of demand curve to the right or left respectively
• Increase of demand (quantity)

  Increase of equilibrium price
• Decrease of demand (quantity)


  Decrease of equilibrium price
• Shifts in supply


  Equilibrium price will change if supply increases or decreases - shift of supply curve to the right or left respectively
• Increase of supply (quantity)


  Decrease of equilibrium price
• Decrease of supply (quantity)

  Increase of equilibrium price
• Shifts in supply and demand


  Equilibrium price will change if both supply and demand change at the same time
• Increase of demand and decrease of supply

  Price is higher and quantity sold has fallen
• Increase in demand higher than decrease in supply

  Increase in both price and quantity
• Excess demand


  If price is below equilibrium price, demand > supply, shortage of goods in the market

  
• Excess supply


  If price is above equilibrium price, supply > demand, unsold goods in the market