Transcript Market Equilibrium

Market Equilibrium
• Equilibrium describes a state in which there
is no tendency to change.
• A market is in equilibrium when buyers
and/or sellers do not see any need to
change the amounts they are buying or
selling.
• Market equilibrium occurs at the price at
which quantity demanded equals quantity
supplied.
Market Equilibrium: The Picture
Price
Peq
Supply
Equilibrium
0
Qeq
Equilibrium occurs at the
intersection of demand
and supply.
Demand
Quantity
Market Equilibrium: The Math
• Assume the following equations describe
demand and supply and use them to
determine equilibrium price and quantity.
– Qd = 250 - 8.5P
– Qs = -10 + 1.5P
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