Market Equilibrium, Shortage and Surplus
Where the two curves cross, the amount buyers want matches the amount sellers offer and the market clears. Away from that price a shortage or a surplus builds up, and what disappointed buyers and stuck sellers do next is the pressure that pushes the price back.
What a learner can do afterwards
- Find the equilibrium price and quantity on a diagram and check that the two quantities match there
- Predict a shortage or a surplus from a price set below or above equilibrium and say who is left disappointed
- Explain the pressure that returns the price to equilibrium in terms of what buyers and sellers actually do
1 · Read
At one special price the two lists agree: buyers want 6 loaves and sellers offer 6, so the shelf clears. That crossing is the equilibrium, with its equilibrium price and equilibrium quantity. Name the crossing first, then check above and below it.
Set the price above the crossing and sellers offer more than buyers take, so loaves pile up in a surplus and sellers sit stuck. Set it below and buyers chase more than sellers bring, so the shelf empties in a shortage and buyers leave empty-handed.
Markets push back toward the crossing through what people actually do. In a surplus, sellers cut the price to clear stock, and in a shortage, buyers bid the price up. A concert that sells out in four minutes sat below its crossing, since eager buyers outnumbered the seats.
Caps breed shortages and floors breed surpluses. A ceiling holds price down so buyers swarm, while a floor holds it up so sellers pile in.
The crossing clears the market, and gaps above or below push the price back.
2 · Watch
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Where it sits
Learn first
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Where this leads
8 questions wait behind this lesson, each with its answer explained. Every answer feeds the sky: stars light as they are learned, and dim when it is time to come back.