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Microeconomics of Equilibrium semi finals
- 1. Equilibrium
- 2. Equilibrium • The meeting of supply and demand results to what is referred to as equilibrium. • It generally pertains to a balance that exists when quantity demanded equals quantity supplied. • It is a general agreement of the buyer and the seller in the exchange of goods and services at a particular price and at a particular quantity.
- 4. Equilibrium • As earlier said, the market referred to here is a situation where buyers and sellers meet while equilibrium is generally understood as a state of balance.
- 5. Equilibrium Market Price • is the price agreed by the seller to offer its good or service for sale and for the buyer to pay for it. Specifically, it is the price in which quantity demanded of a good is exactly equal to quantity supplied of the same good.
- 6. What happens when there is market disequilibrium?
- 7. When there is market disequilibrium, two conditions may happen: a SURPLUS or a SHORTAGE.
- 10. Shortage
- 19. Complex Cases Case 1 Supply Increase, Demand Decrease Case 2 Supply Decrease, Demand Increase Case 3 Supply Increase , Demand Increase Case 4 Supply Decrease, Demand Decrease
- 20. Equilibrium Demand Qd = 100 – 3P Supply Qs = 20 + 2P Qe formula: Qd = Qs 100 – 3P = 20 + 2P 100 – 20 = 2P + 3P 80 = 5P 16 = P
- 21. P = 16 Demand Qd = 100 – 3P Supply Qs = 20 + 2P = 100 – 3(16) = 20 + 2(16) = 100 – 48 = 20 + 32 = 52 = 52
- 22. P = 20 Demand Qd = 100 – 3P Supply Qs = 20 + 2P = 100 – 3(20) = 20 + 2(20) = 100 – 60 = 20 + 40 = 40 = 60
- 23. P = 10 Demand Qd = 100 – 3P Supply Qs = 20 + 2P = 100 – 3(10) = 20 + 2(10) = 100 – 30 = 20 + 20 = 70 = 40
- 24. Price Qd Qs Surplus/Shortage/Equilibrium 65 55 45 35 25 15 Activity Draw separate graphs showing the demand and supply schedule. Determination of Surplus, Shortage and Equilibrium. with the given: Qd = 250 – 3P Qs = 25 + 2P
- 25. Equilibrium Demand Qd = 250 – 3P Supply Qs = 25 + 2P Qe formula: Qd = Qs 250 – 3P = 25 + 2P 250 – 3P = 25 + 2P 250 – 25 = 3P + 2P 225 = 5P 225/5 = 5P/5 45 = P
- 26. P = 45 Demand Qd = 250 – 3P Supply Qs = 25 + 2P = 250 – 3(45) = 25 + 2(45) = = = =
- 27. P = 55 Demand Qd = 250 – 3P Supply Qs = 25 + 2P = = = = = =
- 28. P = 35 Demand Qd = 250 – 3P Supply Qs = 25 + 2P = = = = = =
- 29. Surplus Supply Increase, Demand Decrease Shortage Supply Decrease, Demand Increase Equilibrium Same quantity of Supply and Demand.
- 30. Price Qd Qs Surplus/Shortage/Equilibrium 65 55 155 Surplus 55 85 135 Surplus 45 115 115 Equilibrium 35 145 95 Shortage 25 175 75 Shortage 15 205 55 Shortage Activity Draw separate graphs showing the demand and supply schedule. Determination of Surplus, Shortage and Equilibrium. with the given: Qd = 250 – 3P Qs = 25 + 2P