By now - Bynow,.Tofind marketequilibrium,. .,themarket .Why

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By now, we are familiar with graphs of supply curves and demand curves. To find  market equilibrium, we combine the two curves onto one graph. The point of intersection  of supply and demand marks the point of equilibrium. Unless interfered with, the market  will settle at this price and quantity. Why is this? At this point of intersection, buyers and  sellers agree on both price and quantity. For instance, in the graph below, we see that at  the equilibrium price p*, buyers want to buy exactly the same amount that sellers want  to sell.  If the price were higher, however, we can see that sellers would want to sell more than  buyers would want to buy. Likewise, if the price were lower, quantity demanded would  be greater than quantity supplied. The following graph shows the discrepancy in supply  and demand if the price is higher than the equilibrium price: 
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This note was uploaded on 12/13/2011 for the course ECO 1320 taught by Professor Staff during the Fall '11 term at Texas State.

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By now - Bynow,.Tofind marketequilibrium,. .,themarket .Why

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