PRICE

EQUILIBRIUM
But first, lets discuss
when our test will be.

PRICE EQUILIBRIUM
THE PRICE AT
WHICH THE
QUANTITY
DEMANDED AND
THE QUANTITY
SUPPLIED ARE THE
SAME.

BUT SOMETIMES DIFFERENT FACTORS

CAUSE EITHER DEMAND OR SUPPLY
TO SHIFT. THESE SHIFTS WILL CAUSE
THE EQUILIBRIUM PRICE TO CHANGE.

Lets look at demand first.

WHEN DEMAND
DECREASES - P,
Q

WHEN DEMAND
INCREASES - P,
Q

NOW LETS LOOK AT SHIFTS

IN SUPPLY

WHEN SUPPLY
DECREASES - P,
Q

WHEN SUPPLY
INCREASES - P,
Q

SOMETIMES, BOTH SUPPLY

AND DEMAND CAN SHIFT.

WHEN BOTH CHANGE, ONE VALUE WILL

DEFINITELY CHANGE, THE OTHER VALUE
WILL BE INDETERMINATE. IN THIS EXAMPLE,
WE WOULD SAY Q, P INDETERMINATE

NOW LETS PRACTICE, SOME

OF THESE PROBLEMS
TOGETHER TO GET A FEEL
FOR HOW THIS WORKS.