Where Is the Equilibrium Point on This Graph?
In economics, equilibrium is the point at which the quantity demanded of a good or service is equal to the quantity supplied. This occurs when the price of the good or service is such that the wants of consumers and the willingness of producers are in balance.
On a graph, the equilibrium point is the point where the demand curve and the supply curve intersect. The demand curve shows the quantity of a good or service that consumers are willing to buy at each price. The supply curve shows the quantity of a good or service that producers are willing to sell at each price.
How to Find the Equilibrium Point
To find the equilibrium point on a graph, you can simply look for the point where the two curves intersect. In the graph below, the equilibrium point is at a price of $5 and a quantity of 100 units.
Price ------- $10 $9 $8 $7 $6 $5 $4 $3 $2 $1 Quantity ------- 100 90 80 70 60 50 40 30 20 10 Questions Related to Equilibrium Point
Here are some questions that you may be asked about the equilibrium point:
- What is the equilibrium price?
- What is the equilibrium quantity?
- What happens if the price is below the equilibrium price?
- What happens if the price is above the equilibrium price?
Answers to Questions Related to Equilibrium Point
- The equilibrium price is the price at which the quantity demanded equals the quantity supplied. In the graph above, the equilibrium price is $5.
- The equilibrium quantity is the quantity that is bought and sold at the equilibrium price. In the graph above, the equilibrium quantity is 100 units.
- If the price is below the equilibrium price, there will be a shortage of the good or service. This is because consumers will want to buy more of the good or service than producers are willing to sell.
- If the price is above the equilibrium price, there will be a surplus of the good or service. This is because producers will be willing to sell more of the good or service than consumers want to buy.
Conclusion
The equilibrium point is an important concept in economics. It is the point at which the forces of supply and demand are in balance. The equilibrium price and quantity are determined by the intersection of the demand curve and the supply curve.
