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Economics explained


Demand and supply

Markets in equilibrium

Markets in equilibrium

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Interaction of demand and supply– markets in equilibrium

The equilibrium price (also known as the market-clearing price) is determined where the demand for a product is equal to the supply of the product. This means that there is neither excess quantity demanded nor excess quantity supplied at the equilibrium price

Equilibrium will exist when the plans of consumers (as represented by the market demand curve) match the plans of suppliers (as represented by the market supply curve).

Diagram 1 : Market equilibrium

Diagram 2 : Total consumer expenditure and total revenue

Total consumer expenditure (and therefore total revenue) will be $15,000. ($100 * 150 units)

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