Equilibrium

S3 EPA

Dmarket

Market of bread

Smarket

Price ($)

1

4

3

5

2

6

0

Quantity

6 8 10 1412 2016 18 224

S

D

Equilibriumprice ($4)

Equilibriumquantity

(12)

Equilibrium point

Price

0 Quantity

Price

0 Quantity

S

D

($4) Pe

Qe(12)

($2) P1

Qd(18)

Qs(6)

When the market price (P1) is lower than the equilibrium price (Pe),

the quantity demanded (Qd) will be larger than the quantity supplied (Qs).

Then, there will be a pressure to push the market price upward.

A shortage (or an excess demand) will appear.

Shortage

Price

0 Quantity

S

D

($4) Pe

Qe(12)

($6) P2

Qs(18)

Qd(6)

When the market price (P2) is higher than the equilibrium price (Pe),

the quantity supplied (Qs) will be larger than the quantity demanded (Qd).

Then, there will be a pressure to push the market price downward.

A surplus (or an excess supply) will appear.

Surplus

On 19.9.2014, a lot of buyers of iPhone 6 / 6 Plus lined up outside the Apple Store at IFC.

On that day, the market price of iPhone 6 / 6 Plus …

What is this market situation?

On that day, the market price of iPhone 6 / 6 Plus increased a lot.

S

D

($4) Pe

Qe

(12)

Price

0 Quantity

At equilibrium, the quantity demanded equals to the quantity supplied,

there is no tendency for the price to change.

Total Expenditureor Total Revenue