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Unformatted text preview: Equilibrium Analysis In the market for any particular good X , the decisions of buyers interact simultaneously with the decisions of sellers. When the demand for good X equals the supply of good X , the market for good X is said to be in equilibrium . Associated with any market equilibrium will be an equilibrium quantity and an equilibrium price . The equilibrium quantity of good X is that quantity for which the quantity demanded of good X exactly equals the quantity supplied of good X . The equilibrium price for good X is that price per unit of good X that allows the market to “clear”; that is, the price for which the quantity demanded of good X exactly equals the quantity supplied of good X . The determination of equilibrium quantity and price, known as equilibrium analysis , can be achieved in two different ways: by simultaneously solving the algebraic equations for demand and supply or by combining the...
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This note was uploaded on 11/18/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.
- Fall '10