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Unit 2, Lesson 6 Supply and Demand and Market Equilibrium

AOF Business Economics. Unit 2, Lesson 6 Supply and Demand and Market Equilibrium. Supply and demand interact through price. Supply meets demand in the marketplace for goods and services Interaction between buyers and sellers moves these two forces into balance

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Unit 2, Lesson 6 Supply and Demand and Market Equilibrium

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  1. AOFBusiness Economics Unit 2, Lesson 6Supply and Demand and Market Equilibrium

  2. Supply and demand interact through price • Supply meets demand in the marketplace for goods and services • Interaction between buyers and sellers moves these two forces into balance • Price equilibrium is the point at which supply and demand meet Why is there constant tension between supply and demand?

  3. Price equilibrium determines supply and demand

  4. Surpluses and shortages are forms of supply and demand disequilibrium

  5. Many factors impact price equilibrium

  6. Supply and demand equilibrium = efficient markets • When buyers and sellers reach an equilibrium price, the market operates most efficiently • Companies will continue to offer the goods and services at this price • Consumers will continue to buy the goods and services at this price

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