MARKET EQUILIBRIUM

- A market is in equilibrium if the quantity demanded is equal to the quantity supplied at

a given price.
- Price is dependent on the interaction between demand and supply components of a
market.
- Demand and Supply represent the willingness of consumers and producers to engage in
buying and selling. An exchange of a product takes place when buyers and sellers can
agree upon a price.
Price Ceiling
- A price control or limit on how high a price is charged for a product
- Prevent a price from rising above a certain level
Price Floor
- Price control or limit on how low a price can be charged for a product
- Prevent a price from falling below a certain level

Formula:
Qd=Qs
Example:
250 – 3P = -250 +P
250 + 250 = 3P + 7P
500 = 10P
500/10 = 10P/10
P = 50 (Equilibrium Price)
Qd = 250 – 3(50)
= 250 – 150
Qd = 100 (Equilibrium Quantity)
Qs = -250 + 7(50)
= -250 + 350
Qs = 100 (Equilibrium Quantity)