Changes in Market Equilibrium In this lesson, students will identify factors that can shift a market into disequilibrium. Students will be able to identify.
Post on 17-Dec-2015
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Changes in Market Equilibrium
In this lesson, students will identify factors that can shift a market into disequilibrium.
Students will be able to identify and/or define the following terms:
Disequilibrium
Surplus
Shortage
Let’s Review Equilibrium!
• Equilibrium occurs when quantity supplied equals quantity demanded.
• Economists state that a market will tend toward equilibrium.
• This means that price and quantity will gradually move towards their equilibrium levels.
Let’s Review Disequilibrium!
• Disequilibrium occurs when the quantity supplied does not equal the quantity demanded.
• Disequilibrium occurs when the price is not right.
• If the price is too high or too low for that particular market, disequilibrium occurs.
Surplus
• A surplus occurs when quantity supplied is greater than quantity demanded.
• Another term for surplus is excess supply.
• When a surplus occurs, the price must be lowered to restore the market to equilibrium.
Shortage
• A shortage is a situation in which quantity demanded is greater than quantity supplied.
• Another term for shortage is excess demand.
• When a shortage occurs, prices must be raised to restore the market to equilibrium.
Prices
• Market disequilibrium occurs when the price is not right for that particular market.
• If the price is too low for that particular market, demand is encouraged and shortage occurs.
• If the price is too high for that particular market, demand is discouraged and surplus occurs.
The beautiful thing about price is thatit can easily be changed to restore
equilibrium to the market.
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