1. Equilibrium State of the Market Equilibrium
Suppliers want to sell for as much as they can to make a profit, while demanders (consumers) want to pay as little as possible for goods and services.
Who wins? Neither – some adjustment is needed to reach a compromise
This is how an equilibrium price is reached – where they meet in the middle – this is price that is charged
Both buyers and sellers have a role in determining prices

2. Combining the Graphs
When Supply and Demand Curves are combined, we have a complete picture of the market, and can tell where the equilibrium price falls. At the equilibrium price there is neither a surplus nor a shortage On the EOCT the equilibrium price is called the market clearing price (sometimes)

3. Price Equilibrium Price Surplus Demand Supply Shortage Quantity 30 2520
Price
Equilibrium Price 15
Supply
Demand 10 5
Shortage 5 10 15 20 25 30 35 40 45 50 55 60
Quantity

4. State of the Market Equilbrium – Where Supply and Demand Meet
Surplus – quantity supplied is greater than quantity demanded (too much)
Shortage – quantity demanded is greater than quantity supplied (not enough)

5. Demand Schedule for Senior T-Shirts
Price
Quantity
$20 25
$18 35
$16 50
$14
125
$12
150
$10
175 $8
200 $6
250
Graph the Demand Schedule on graph paper.
Graph must have a title, labels for Price and Quantity AND use equal increments when setting up your graph.

6. Explaining and Predicting Prices
When Supply and or Demand Shift what happens to the EQ Price and the Quantity?
We can use GRAPHS to figure this out!

7. Market for Gatorade
The price of Powerade decreased, so what will happen to Quantity and EQ Price? (for Gatorade?)

8. Market for Flu Shots
The government gives suppliers a subsidy, what happens to the quantity and EQ price?
P Q

9. Suppose the demand for natural gas rises this year while the supply of natural gas is unchanged.

10. If both the demand and supply of American textile products increase this year, what would you predict would happen to equilibrium price and quantity in the textile market?