Chapter 4
Market Equilibrium
Market Equilibrium
Market equilibrium refers to the condition in a market where the quantity supplied matches the quantity demanded.
At equilibrium, the supply and demand ...
Surplus and Shortages
Market equilibrium is a balance between the quantities of goods supplied and demanded. When this balance is disrupted, shortages or surpluses occur.
A ...
The Mathematics of Equilibrium
The mathematics of market equilibrium can be understood by using the equations for quantity demanded and quantity supplied.
Consider a hypothetical ...
Effect of Shift in Demand Curve on Market Equilibrium
A shift in the demand curve can significantly impact the equilibrium price and quantity.
Consider an example of a bicycle market.
Suppose a new fitness ...
Effect of Shift in Supply Curve on Market Equilibrium
A change in supply or shift in the supply curve can influence the equilibrium price and quantity.
Consider a bicycle market.
If the government subsidizes ...
Simultaneous Shifts in Demand and Supply Curves I
Shifts in demand and supply curves can occur simultaneously and in the same direction.
Consider a market for gasoline cars.
Suppose the economy is ...
Simultaneous Shifts in Demand and Supply Curves II
Shifts in demand and supply curves can happen in opposite directions.
Consider a market for gasoline cars.
Suppose a technological breakthrough improving ...
Price Gouging
Disasters or emergencies often disrupt a market's equilibrium. This leads to situations where demand spikes or supply drops, causing sellers to raise ...
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