Unformatted text preview: ange in supply. An increase in supply shifts the
supply curve rightward (from S0 to S1), and a decrease in supply shifts the supply curve leftward (from S0 to S2).
animation Review Quiz ◆
5 Define the quantity supplied of a good or service.
What is the law of supply and how do we
What does the supply curve tell us about the
producer’s minimum supply price?
List all the influences on selling plans, and for
each influence, say whether it changes supply.
What happens to the quantity of cell phones
supplied and the supply of cell phones if the
price of a cell phone falls?
Work Study Plan 3.3
and get instant feedback. Now we’re going to combine demand and supply
and see how prices and quantities are determined. 9160335_CH03_p053-080.qxd 64 6/22/09 8:56 AM Page 64 CHAPTER 3 Demand and Supply ◆ Market Equilibrium ■
■ Price regulates buying and selling plans.
Price adjusts when plans don’t match. Price (dollars per bar) We have seen that when the price of a good rises,
the quantity demanded decreases and the quantity
supplied increases. We are now going to see how the
price adjusts to coordinate the plans of buyers and
sellers and achieve an equilibrium in the market.
An equilibrium is a situation in which opposing
forces balance each other. Equilibrium in a market
occurs when the price balances the plans of buyers
and sellers. The equilibrium price is the price at which
the quantity demanded equals the quantity supplied.
The equilibrium quantity is the quantity bought and
sold at the equilibrium price. A market moves toward
its equilibrium because FIGURE 3.7 Equilibrium 3.00
6 million bars
at $2.00 a bar 2.50 2.00 Equilibrium 1.50 1.00 Demand for
9 million bars
at $1.00 a bar 0.50 0 5 10 Price as a Regulator
The price of a good regulates the quantities
demanded and supplied. If the price is too high, the
quantity supplied exceeds the quantity demanded. If
the price is too low, the quantity demanded exceeds
the quantity supplied. There is one price at whi...
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