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Balancing the Market
The point at which quantity demanded and
quantity supplied come together is known as
equilibrium.
Finding Equilibrium
Equilibrium Point
Combined Supply and Demand Schedule
$3.50
$2.50
$2.00
Equilibrium
Price
$1.50
$1.00
$.50
Supply
0
50
100
150
a
Equilibrium
Quantity
Price per slice
$3.00
200
Price of
a slice
of pizza
Quantity
demanded
Quantity
supplied
$ .50
300
100
$1.00
250
150
$1.50
200
200
$2.00
150
250
$2.50
100
300
$3.00
50
350
Demand
250
Slices of pizza per day
300
350
Chapter 6, Section 1
Result
Shortage from
excess demand
Equilibrium
Surplus from
excess supply
Market Disequilibrium
If the market price or quantity supplied is anywhere but at the
equilibrium price, the market is in a state called
disequilibrium. There are two causes for disequilibrium:
Excess Demand
• Shortages occur
when quantity
demanded is more
than quantity
supplied.
Excess Supply
• Surpluses occur
when quantity
supplied exceeds
quantity demanded.
Interactions between buyers and sellers will
always push the market back towards
equilibrium. Chapter 6, Section 1