A market is in equilibrium if at the market price the quantity demanded is equal to the quantity supplied. The price at which the quantity demanded is equal to the quantity supplied is called the equilibrium price or market clearing price and the corresponding quantity is the equilibrium quantity.

1. MARKET EQUILIBRIUM
PREPARED AND PRESENTED BY:
MOHAMMAD RAHMATULLAH
STUDENT ID: 182006031

2. AREA COVERED
 INTRODUCTION TO MARKET EQUILIBRIUM
 LOW OF DEMAND AND SUPPLY
 MARKET EQUILIBRIUM FORMULA
 MARKET EQUILIBRIUM CURVE

3. INTRODUCTION TO MARKET EQUILIBRIUM
• AN EQUILIBRIUM IS SITUATION IN WHICH OPPOSING FORCES BALANCE
EACH OTHER.
• MARKET EQUILIBRIUM OCCURS WHEN THE PRICE BALANCES BUYING PLANS
AND SELLING PLANS.
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PRICE
QUANTITY OFDEMAND AND QUANTITY OF SUPPLY
Market Equilibrium Graph
Quantity of Demand Quantity of Supply

4. LOW OF DEMAND AND SUPPLY
• CETERIS PARIBUS, THE PRICE OF A GOOD INCREASES (↑), QUANTITY
DEMANDED DECREASES (↓); INVERSELY, THE PRICE OF
A GOOD DECREASES (↓), QUANTITY DEMANDED INCREASES (↑).
QD = F(P) (GENERAL FUNCTION) OR
QD = 16 – 4P (SPECIFIC FUNCTION)
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Price
Quantity of Demand
Quantity of Demand Graph

5. • CETERIS PARIBUS, THE PRICE OF A GOOD INCREASES (↑), QUANTITY
SUPPLIED INCREASES (↑); SIMILARLY, WHEN THE PRICE OF
A GOOD DECREASES (↓), QUANTITY SUPPLIED DECREASES (↓).
QS = F(P) (GENERAL FUNCTION) OR
QS = 4 + 2P (SPECIFIC FUNCTION)
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Price
Quantity of Supply
Quantity of Supply Graph

6. MARKET EQUILIBRIUM FORMULA
BY APPLYING THE MARKET EQUILIBRIUM EQUATION, WE CAN FIND
OUT EQUILIBRIUM PRICE, EQUILIBRIUM QUANTITY DEMANDED AND
EQUILIBRIUM QUANTITY SUPPLIED.
THE EQUATION IS, QD = QS.
LET, QD = 16 – 4P, AND QS = 4 + 2P.
THEN, THE EQUATION IS
=) 16 – 4P = 6 + 2P; =) – 4P – 2P = 6 – 16; =) – 6P = -12; =) P = 2
SO, THE EQUILIBRIUM DEMAND AND SUPPLY ARE,
QD = 16 – 4P; = 16 – 4 X 2; 8
QS = 4 + 2P; = 4 + 2 X 2; 8

7. MARKET EQUILIBRIUM CURVE
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Price
Quantity of demand and Quantity of supply
Market equilibrium graph
Quantity of demand
Quantity of supply
Market
Shortage
areas
Surplus areas

8. QUESTION AND ANSWER SESSION