ECON 101 Lecture Notes - Lecture 8: Negative Number, Economic Equilibrium, Shortage
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ECON 101 Full Course Notes
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Econ 101 lecture 8 equilibrium and elasticity. In economics, we believe that left alone, the forces of supply and demand will establish a price where the quantity of goods and services produced will equal the quantity of goods and services consumed. Graphically, the intersection between the supply and demand curves is the market equilibrium. The y value at the market equilibrium is the market equilibrium price. The x value at the market equilibrium is the market equilibrium quantity demanded. However, the market is not always in equilibrium. Sometimes the demand exceeds the supply at the current market price. This means there is an excess demand. This creates a shortage on the market. This happens when the selling price is below the market equilibrium price. Shortages are caused by two possible market changes that have occurred: There has been an increase in demand. There has been a decrease in supply.
