1. MARKET EQUILIBRIUM

2. Market Equilibrium
Market Equilibrium is when the quantity demanded and the quantity supplied at a particular price are EQUAL.
Equilibrium Price is the price at which the quantity demanded and the quantity supplied are equal.

3. Market Equilibrium SUPPLY DEMAND Equilibrium Price $6 $5.00 10 50
Price per Slice
Quantity Demand
Quantity Supplied
$5.00 10 50
$4.00 20 40
$3.00 30
$2.00
$1.00
SUPPLY $5 $4
Equilibrium $3
DEMAND $2 $1 10 20 30 40 50 60
Quantity

4. Surplus
A SURPLUS is when the quantity supplied is greater than the quantity demanded.
Price
SUPPLY
DEMAND
Quantity

5. How is the problem of a surplus solved?
Suppliers lower the price
Law of Supply takes effect, so suppliers…
decrease supply
Law of Demand takes effect, so consumers..
increase demand

6. Shortage SUPPLY DEMAND
A SHORTAGE is the result of quantity demanded is greater than quantity supplied.
Price
SUPPLY
DEMAND
Quantity

7. How is the problem of a shortage solved?
Suppliers raise the price
Law of Supply takes effect, so suppliers…
Increase supply
Law of Demand takes effect, so consumers…
Decrease demand