Economics Chapter 4: Section 4.5

1. To find the price point where supply and demand are equal 

2. The producer is willing to sell it at that price, the consumer is willing to buy it at that price

Producer’s Goal

the point at which the quantity demanded and quantity supplied are equal

Equilibrium

the quantity demanded exceeds the quantity supplied

Shortage

the quantity supplied exceeds the quantity demanded

Surplus

the invisible hand of the market

Equilibrium

The only time an equilibrium price will change is if there is a change in what?

supply or demand

demand is elastic (doesn’t stay the same) because there are substitute goods available

Elasticity of Demand

1. Consumers will pay very high prices for goods that have no substitutes available 

2. Ex: medical treatments, medical treatments, medical drugs, cigarettes, etc.

Inelastic Demand