Econ 104 - 7.1 - Supply and Demand Together P $6.00 D S...

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$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 0 5 10 15 20 25 30 35 P Q Supply and Demand Together D S Equilibrium : P has reached the level where quantity supplied equals quantity demanded
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D S $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 0 5 10 15 20 25 30 35 P Q Equilibrium price: P Q D Q S $0 24 0 1 21 5 2 18 10 3 15 15 4 12 20 5 9 25 6 6 30 The price that equates quantity supplied with quantity demanded
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D S $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 0 5 10 15 20 25 30 35 P Q Equilibrium quantity: P Q D Q S $0 24 0 1 21 5 2 18 10 3 15 15 4 12 20 5 9 25 6 6 30 The quantity supplied and quantity demanded at the equilibrium price
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$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 0 5 10 15 20 25 30 35 P Q D S Surplus: when quantity supplied is greater than quantity demanded Surplus Example: If P = $5, then Q D = 9 lattes and Q S = 25 lattes resulting in a surplus of 16 lattes
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$1.00 $2.00 $3.00 $4.00 $5.00 $6.00 0 5 10 15 20 25 30 35 P Q D S Surplus: when quantity supplied is greater than quantity demanded Facing a surplus, sellers try to increase sales by cutting the price. This causes
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