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Equilibrium

Equilibrium. Equilibrium. Price at which the Q s equals the Q d There is no Surplus or Shortage Natural Market Price. S. Price. $3.50. D. 12 Million Gals. Quantity. When prices are “too high”…. Surplus. Price. S. $4.75. D. 7 million gals. 18 Million gals. =Qd. =Qs. Quantity.

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Equilibrium

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  1. Equilibrium

  2. Equilibrium • Price at which the Qs equals the Qd • There is no Surplus or Shortage • Natural Market Price

  3. S Price $3.50 D 12 Million Gals Quantity

  4. When prices are “too high”… Surplus Price S $4.75 D 7 million gals 18 Million gals =Qd =Qs Quantity

  5. When prices are “too low”… S Price $1.89 Shortage D 5 million gals 18 million gals Quantity =Qd =Qs

  6. S Price D2 D Quantity Increase in Demand

  7. S Price D D2 Quantity Decrease in Demand

  8. Increase in Supply S Price S2 D Quantity

  9. Decrease in Supply S2 S Price D Quantity

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