Market equilibrium is like the perfect balance where supply and demand come together. Let’s break it down:
Supply and Demand Curves: Picture two lines on a graph. One line goes up, which represents supply, and the other line goes down, representing demand. The point where these two lines meet is the equilibrium point.
Price Determination: At the equilibrium point, the price of things is just right. If the price is too high, there are more items than people want to buy, which is called a surplus. In this case, sellers lower the price to attract more buyers. On the other hand, if the price is too low, not enough items are available, leading to a shortage. This makes sellers increase the price.
Shifts in Curves: If something changes, like what people like to buy or how much it costs to make products, these lines will move. This results in new equilibrium prices. So, market equilibrium is really important for keeping the economy balanced!
Market equilibrium is like the perfect balance where supply and demand come together. Let’s break it down:
Supply and Demand Curves: Picture two lines on a graph. One line goes up, which represents supply, and the other line goes down, representing demand. The point where these two lines meet is the equilibrium point.
Price Determination: At the equilibrium point, the price of things is just right. If the price is too high, there are more items than people want to buy, which is called a surplus. In this case, sellers lower the price to attract more buyers. On the other hand, if the price is too low, not enough items are available, leading to a shortage. This makes sellers increase the price.
Shifts in Curves: If something changes, like what people like to buy or how much it costs to make products, these lines will move. This results in new equilibrium prices. So, market equilibrium is really important for keeping the economy balanced!