AP Macroeconomics / Unit 1: Basic Economic Concepts
1.6 Market Equilibrium, Disequilibrium, and Changes in Equilibrium
Notes
- Equilibrium: quantity demanded equals quantity supplied.
- Price above equilibrium: surplus. Below: shortage.
- Demand increases → price and quantity rise. Supply increases → price falls, quantity rises.
Practice
Demand increases and supply stays the same. Price and quantity:
Shift right along supply.
A price set below equilibrium creates a:
More demanded than supplied.
Supply and demand both increase. Which is certain?
Price is indeterminate.
Ready for more? Take the Unit 1 test.