About This Chapter
Demand, Supply and Market Equilibrium
Supply and demand is the very heart of economics. In business, there is a constant battle to keep supply and demand in balance. You likely know that if the balance is disrupted that it can cause major issues. Think about what would happen if the demand for bananas suddenly went up, but the supply of bananas didn't increase. It would mean a major setback for the banana companies because there would be no way they could provide enough bananas for all the people who wanted to buy them. Our lessons will cover the ideas of supply and demand, so you can better understand how businesses avoid disasters that can occur when the system is out of balance.
Market demand represents the need for a product. Learn how businesses project what the market demand will be so that they can keep their production on track and not produce too much or too little of their products. Study demand schedules and find out what purpose they serve in the process of meeting market demand.
Market supply is the amount of products a business has available. As you know, supply goes hand-in-hand with demand. Our lessons will show you how a supply schedule is created and how it is used to ensure a good supply and demand balance.
Charts, graphs and other measurement processes are used to help businesses stay on track with supply and demand. As you watch the lessons, you'll learn about the Law of the Downward Sloping Demand Curve. See what happens when demand curves are downward sloping. Along the same lines, you'll learn about upward sloping supply curves and find out what it means when this occurs. Let our lessons explain these concepts to you through easy-to-understand, everyday examples. Also find out what market equilibrium is and learn how to calculate it. Thanks for watching!
1. Market Demand Schedule
A market demand schedule is a table used to explain the correlation between the price consumers are willing to pay for something based on the demand for it. Learn about market demand and explore the relationship between demand and price tracked by market demand schedules.
2. Market Supply Schedule
Supply is the amount, or quantity, of a product available for purchase on the market. Explore the relationship between the economy and supply using a real-world example of how to use a market supply schedule to track suppliers' quantity of bananas.
3. The Law of the Downward Sloping Demand Curve
The downward sloping demand curve shows the relationship between the price of a product and the demand for it. Explore the factors that can lead to a demand shift, and the substitution effect.
4. The Upward-Sloping Supply Curve
The upward-sloping supply curve is a graph that shows the relationship between a product's price and the quantity supplied. Explore the factors that lead to a shift in the supply of a good or service and the nature of the supply market.
5. How to Calculate Market Equilibrium
Market equilibrium is accomplished when the supplier and the buyer agree on a price. Discover how shortages and surpluses affect market equilibrium, how to calculate market equilibrium, and how to illustrate it graphically.
6. How Changes in Supply and Demand Affect Market Equilibrium
Market equilibrium is affected by changes in supply and demand. Explore how supply and demand curves increase and decrease, how different shifts in the curves can affect price, and what happens when there are simultaneous changes in supply and demand.
Earning College Credit
Did you know… We have over 220 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.
To learn more, visit our Earning Credit Page
Transferring credit to the school of your choice
Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.
Other chapters within the Economics 102: Macroeconomics course
- Scarcity, Choice, and the Production Possibilities Curve
- Comparative Advantage, Specialization and Exchange
- Measuring the Economy
- Inflation Measurement and Adjustment
- Understanding Unemployment
- Aggregate Demand and Supply
- Macroeconomic Equilibrium
- Inflation and Unemployment
- Economic Growth and Productivity
- Money, Banking and Financial Markets
- Central Bank and the Money Supply
- Fiscal and Monetary Policies
- Foreign Exchange and the Balance of Payments
- Inflows, Outflows, and Restrictions
- Studying for Economics 102