Market Equilibrium

1
Market Equilibrium

• Equilibrium describes a state in which there is
  no tendency to change.
• A market is in equilibrium when buyers and/or
  sellers do not see any need to change the amounts
  they are buying or selling.
• Market equilibrium occurs at the price at which
  quantity demanded equals quantity supplied.

2
Market Equilibrium The Picture
Price
Supply
Equilibrium occurs at the intersection of demand
and supply.
Peq
Equilibrium
Demand
Quantity
Qeq
0
3
Market Equilibrium The Math

• Assume the following equations describe demand
  and supply and use them to determine equilibrium
  price and quantity.
• Qd 250 - 8.5P
• Qs -10 1.5P
• And the answers are?