๐ Topic Summary
The equilibrium price and quantity represent the point where the supply and demand curves intersect. At this point, the quantity of a product that consumers demand equals the quantity that suppliers are willing to supply. Finding this equilibrium is crucial for understanding market dynamics and predicting price and quantity fluctuations.
To solve for equilibrium, you typically set the supply and demand equations equal to each other and solve for the price (P). Once you have the equilibrium price, you can substitute it back into either the supply or demand equation to find the equilibrium quantity (Q). Let's practice!
๐ค Part A: Vocabulary
Match the following terms with their correct definitions:
| Term |
Definition |
| 1. Demand |
A. The amount of a product that producers are willing to offer for sale at a given price. |
| 2. Supply |
B. The point where supply and demand curves intersect. |
| 3. Equilibrium Price |
C. The amount of a product that consumers are willing and able to purchase at a given price. |
| 4. Equilibrium Quantity |
D. The price at which the quantity demanded equals the quantity supplied. |
| 5. Market Equilibrium |
E. The quantity of a product bought and sold when the market is in equilibrium. |
โ๏ธ Part B: Fill in the Blanks
Complete the following paragraph using the words provided:
(Supply, Demand, Equilibrium, Price, Quantity)
The point where the __________ and __________ curves intersect is called the __________. At this point, the __________ demanded equals the __________ supplied, determining the __________ price and quantity.
๐ค Part C: Critical Thinking
Explain in your own words how changes in consumer income can affect the equilibrium price and quantity of a normal good.