Market for acoustics
When quantity demanded equals quantity supplied, we say it achieves equilibrium price, in which buyers and sellers are coordinated.
Surplus: At a particular price when quantity supplied exceeds quantity demanded.
When the price is higher than the equilibrium price, how do buyers and suppliers respond respectively?
Quantity supplied goes up and quantity demanded goes down.
Whose plans are satisfied?
What does "plan" mean: If you have a certain goal, given the rules that you face, can you meet the goal?
Suppliers are not satisfied because they cannot sell all their goods.
Buyers are satisfied because at that price there are more goods than number of buyers, which means that the buyers can get what they want.
What does "satisfied" mean: given the particular price you don't have incentives to change your behavior.
What will suppliers do: they cut the price.
Shortage: At a particular price, quantity demanded exceeds quantity supplied
Whose plans are satisfied? Suppliers are satisfied because at that price they can sell all what the quantity that they want to sell.
Consumers are not satisfied because there are not enough goods.
When price goes up it means something is relatively scarce and the shortage is alleviating. When price drops it means something is relatively abundant and the surplus is being narrowed.
Equilibrium: At a certain price consumers and suppliers have no incentive to alter their behavior.
Two kinds of equilibrium
(1)Market clearing:
Quantity demanded = Quantity supplied
Good
(2)Non-market clearing
not good
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