Describe the process by which the market moves from a state of shortage to equilibrium.

In a shortage, consumers bid up prices, encouraging suppliers to increase production. As prices rise, demand decreases, and the market moves towards a point where quantity supplied equals quantity demanded, reaching equilibrium.

Describe the process by which the market moves from a state of surplus to equilibrium.

In a surplus, suppliers lower prices to attract consumers, which increases demand. As prices fall, suppliers reduce production, and the market moves towards a point where quantity supplied equals quantity demanded, reaching equilibrium.

Finding Price Equilibrium

11th Grade•45 minutes

Learning Objective

I can explain how supply and demand interact to determine price equilibrium.

Practice Questions

This lesson includes 7 practice questions to reinforce learning.

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1. Define 'quantity demanded' as discussed in the video.

2. Explain what a shortage indicates to suppliers in the market.

3. What is a surplus, and how do suppliers typically react to a surplus in the market?

...and 4 more questions

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Market equilibrium | Supply, demand, and market equilibrium | Microeconomics | Khan Academy

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