Equilibrium price is the price at which the quantity demanded equals the quantity supplied.
Equilibrium quantity is the quantity bought and sold at the equilibrium price.
Market equilibrium occurs when the quantity demanded equals the quantity supplied—when buyers and sellers’ plans are consistent.
Equilibrium point on the graph is the price the consumer is willing to pay, and the producer is willing to accept. Stability. Any movement away from this point will produce points (surplus or shortage) that will bring the market price to equilibrium.
E0 = equilibrium P=0 , Q= 0. If Demand increases from D0 to D1, the price will go up and Q will go up to E1 on the Supply curve: P1 and Q1.
Supply doesn’t change, demand decreases (leftward shift), price (P) down and Quantity (Q) down
Supply increases, demand doesn’t change. If P is down, Q goes up (e.g cell phone in 2002 very expensive)
Demand doesn’t change, but Supply is down, e.g. hunger market: P is up, Q down, scarcity.
Demand and supply increase D1, S1 (rightward shift) . Q is up but P is ambiguous, we don’t know (if supply is up more than demand, price goes down)
D decreases, S decreases, Q decreases, P ambiguous ( if they go in the same direction, we only know Q not P)
D up, S down, P increases, but Q is ambiguous
D down, S up, P decreases, Q ambiguous