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CHAPTER 6

CHAPTER 6. MARKETS, EQUILIBRIUM AND PRICES. SUPPLY MEETS DEMAND. Flea market example Point where buyers and sellers agree-equilibrium Quantity that consumers are willing to buy equals quantity producers are willing to produce. Market Equilibrium. Like a balanced scale Watermelon example

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CHAPTER 6

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  1. CHAPTER 6 MARKETS, EQUILIBRIUM AND PRICES

  2. SUPPLY MEETS DEMAND Flea market example Point where buyers and sellers agree-equilibrium Quantity that consumers are willing to buy equals quantity producers are willing to produce

  3. Market Equilibrium Like a balanced scale Watermelon example Equilibrium price

  4. Prices and Balance In competition prices are negotiated Farmers market is great place to see this in action “Trial and error” messages

  5. The Price is “Wrong” Disequilibrium Two outcomes: shortage or surplus Price is too low-shortage Excess demand

  6. The Price is “Wrong” Price is to High- Surplus Excess supply Both are a sort of guessing game Surpluses and shortages are usually temporary

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