Unit 2, Lesson 6 Supply and Demand and Market Equilibrium
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Transcript of Unit 2, Lesson 6 Supply and Demand and Market Equilibrium
Unit 2, Lesson 6
Supply and Demand and Market Equilibrium
AOFBusiness Economics
Supply and demand interact through price
• Supply meets demand in the marketplace for goods and services
• Interaction between buyers and sellers moves these two forces into balance
• Price equilibrium is the point at which supply and demand meet
Why is there constant tension between supply and demand?
Price equilibrium determines supply and demand
Surpluses and shortages are forms of supply and demand disequilibrium
Many factors impact price equilibrium
Supply and demand equilibrium = efficient markets
• When buyers and sellers reach an equilibrium price, the market operates most efficiently
• Companies will continue to offer the goods and services at this price
• Consumers will continue to buy the goods and services at this price