Equilibrium and economic efficiency. equilibrium is important to create both a balanced market and an efficient market. if a market is at its equilibrium price and quantity, then it has no reason to move away from that point, because it’s balancing the quantity supplied and the quantity demanded. Equilibrium and economic efficiency. equilibrium is important to create both a balanced market and an efficient market. if a market is at its equilibrium price and quantity, then it has no reason to move away from that point, because it’s balancing the quantity supplied and the quantity demanded.
The equilibrium price is the only price where the desires of consumers and the desires of producers agree—that is, where the amount of the product that consumers want to buy (quantity demanded) is equal to the amount producers want to sell (quantity supplied). this mutually desired amount is called the equilibrium quantity. Economists call this common quantity the equilibrium quantity. at any other price, the quantity demanded does not equal the quantity supplied, so the market is not in equilibrium at that price. in figure 3.4, the equilibrium price is $1.40 per gallon of gasoline and the equilibrium quantity is 600 million gallons. if you had only the demand and. Step 1. draw demand and supply curves showing the market before the economic change took place. think about the shift variables for demand, and the shift variables for supply. using this diagram, find the initial equilibrium values for price and quantity. step 2. This section also introduces the concept of equilibrium—a stable market condition—and illustrates situations where the market is out of equilibrium, resulting in either a short term surplus or shortage situation, and the resulting market pressure toward equilibrium.
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