Market Equilibrium vs Disequilibrium - Demand & Supply.pptx

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The PowerPoint explains market equilibrium vs. disequilibrium with regard to demand and supply. It explains the combined curves of demand and supply and relative magnitudes of change.

1. Market Equilibrium vs Disequilibrium Demand & Supply Relative Magnitudes of Change Combined Curves EXAMPLES

2. WHAT SHOULD YOU KNOW ALREADY Links are mentioned in the description

3. The operation of the market depends on the interaction between buyers and sellers. An equilibrium is the condition that exists when quantity supplied and quantity demanded are equal. Market Equilibrium Only in equilibrium is quantity supplied equal to quantity demanded. At any price level other than P , the wishes of buyers and sellers do not coincide.

4. Excess demand , or shortage, is the condition that exists when quantity demanded exceeds quantity supplied at the current price. When quantity demanded exceeds quantity supplied, price tends to rise until equilibrium is restored . Market Disequilibrium For Demand: Price & quantity are in inversely related For Supply: Price & quantity are directly related

5. Excess supply , or surplus, is the condition that exists when quantity supplied exceeds quantity demanded at the current price. When quantity supplied exceeds quantity demanded, price tends to fall until equilibrium is restored. Market Disequilibrium For Demand: Price & quantity are in inversely related For Supply: Price & quantity are directly related

6. Increases in Demand and Supply Higher demand leads to higher equilibrium price and higher equilibrium quantity. Higher supply leads to lower equilibrium price and higher equilibrium quantity. Price is not the determinant here

7. Lower demand leads to lower price and lower quantity exchanged. Lower supply leads to higher price and lower quantity exchanged. Decreases in Demand and Supply Price is not the determinant here

8. The relative magnitudes of change in supply and demand determine the outcome of market equilibrium. Relative Magnitudes of Change

9. When supply and demand both increase, quantity will increase, but price may go up or down. Relative Magnitudes of Change

10. For complete understanding of concepts of this topic, watch the video by clicking the below link; https://youtu.be/AEh8Ydut7_A