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Unformatted text preview: intersect at point E which is an equilibrium point at which price P = 2 and quantity demanded and supplied are both equal (q = 4). At any other price higher than P such as P 1 , the quantity supplied S 1 exceeds the quantity demanded d 1 (S 1 > d 1 ) and hence at this stage, some sellers remain dissatisfied. On the other hand at any lower price such as P 2 , quantity demanded d 2 exceeds quantity supplied S 1 (d 2 > S 1 ) and this time some buyers remain dissatisfied. Therefore only at the point of intersection between demand and supply curves can equilibrium be attained. In other words, equilibrium price represents that price at which buyers are willing to buy the good and sellers are willing to sell it. This is the point of satisfaction for both the groups....
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This note was uploaded on 11/17/2011 for the course EC ec 201 taught by Professor - during the Fall '10 term at Montgomery.
- Fall '10