SUPPLY AND DEMAND TOGETHER

SUPPLY AND DEMAND TOGETHER - SUPPLY AND DEMAND TOGETHER...

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SUPPLY AND DEMAND TOGETHER Market Equilibrium o Once the price is reached, there are no more incentives o Only one price where supply is going to be equal to demand o Pe = equilibrium price o Surplus = when there is more quantity supplied than quantity demanded o Shortage = when there is more quantity demanded than quantity supplied o Gains from exchange is when people want to buy something at a higher market price and when sellers are willing to sell them for less Market Equilibrium Conditions Changes in Market Prices New equilibrium prices will emerge in response to changes in the determinants of demand and supply Consider the market for wheat below An equilibrium price per bushel assumes that all other determinants of demand and supply are constant (input prices, price of related goods, technology, preferences, etc.) What happens to market conditions given an increase in the price of fertilizer? o
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SUPPLY AND DEMAND TOGETHER - SUPPLY AND DEMAND TOGETHER...

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