Textbook Notes (368,434)
United States (206,040)
Economics (276)
ECON 1116 (137)
Chapter

Supply and demand together.docx

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Department
Economics
Course
ECON 1116
Professor
Irena Tsvetkova
Semester
Spring

Description
SUPPLY & DEMAND TOGETHER Disequilibrium ­ Surplus (excess supply): When price is too high and quantity supplied is greater  than quantity demanded ­ Facing a surplus, sellers try to increase sales by cutting the price  ▯Causes quantity   demanded to rise and quantity supplied to fall which reduce the surplus ­ Prices continue to fall until quantity supplied becomes equal to quantity  demanded (surplus = zero) Disequilibrium ­ Shortage (excess demand): When price is too low and quantity demanded is  greater than quantity supplied ­ Sellers increase price causing quantity demanded to fall and quantity supplied to 
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