Everyday Market Equilibrium Examples: How Prices & Quantities Balance

📚 Quick Study Guide

• ⚖️ Market equilibrium is the point where quantity supplied equals quantity demanded.
• 📈 The demand curve slopes downward, indicating that as price increases, quantity demanded decreases.
• 📉 The supply curve slopes upward, indicating that as price increases, quantity supplied increases.
• 📍 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.
• ➕ Excess demand (shortage) occurs when quantity demanded is greater than quantity supplied.
• ➖ Excess supply (surplus) occurs when quantity supplied is greater than quantity demanded.
• 🔄 Changes in supply or demand will shift the curves, leading to a new equilibrium.
• 💡 Formula: Demand: $Q_d = a - bP$, Supply: $Q_s = c + dP$, Equilibrium: $Q_d = Q_s$

Practice Quiz

1. What happens to the equilibrium price and quantity of ice cream if there's a heatwave?
1. A. Price decreases, quantity increases.
2. B. Price increases, quantity decreases.
3. C. Price and quantity both increase.
4. D. Price and quantity both decrease.
2. Suppose the government imposes a price ceiling below the equilibrium price of apartments. What is the most likely outcome?
1. A. A surplus of apartments.
2. B. A shortage of apartments.
3. C. The market remains in equilibrium.
4. D. An increase in the quality of apartments.
3. If the price of coffee beans increases, what happens to the equilibrium price and quantity of coffee?
1. A. Price decreases, quantity increases.
2. B. Price increases, quantity decreases.
3. C. Price and quantity both increase.
4. D. Price and quantity both decrease.
4. Technological advancements in smartphone manufacturing lead to lower production costs. How does this affect the market equilibrium for smartphones?
1. A. Price increases, quantity decreases.
2. B. Price decreases, quantity increases.
3. C. Price and quantity both increase.
4. D. Price and quantity both decrease.
5. If consumer income increases and pizza is a normal good, what happens to the equilibrium price and quantity of pizza?
1. A. Price decreases, quantity increases.
2. B. Price increases, quantity decreases.
3. C. Price and quantity both increase.
4. D. Price and quantity both decrease.
6. A new study reveals the health benefits of apples, increasing consumer demand. What happens to the equilibrium price and quantity of apples?
1. A. Price decreases, quantity increases.
2. B. Price increases, quantity decreases.
3. C. Price and quantity both increase.
4. D. Price and quantity both decrease.
7. The government imposes a tax on gasoline. How does this affect the market equilibrium for gasoline?
1. A. Price decreases, quantity increases.
2. B. Price increases, quantity decreases.
3. C. Price and quantity both increase.
4. D. Price and quantity both decrease.