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The answer is from an economics point of view. You might need to draw a diagram to understand the question better. Let's say that the initial equilibrium price and quantity is stable, where the demand and supply curves intersect each other. Using the market for console games for relevance, let's say the price of Play Station 3 is initially priced at USD 3.00. (it's only an example, as I have no idea how much it costs). At this price, we can say that that is the equilibrium price of the PS3, and the equilibrium quantity is 1000 units. However the equilibrium price and quantity can change depending on changes in the supply and demand in the market, hence the question is asking how the interaction between demand and supply can determine the price and output. Let assume that the demand for PS3 increases, which can happen in real life during holiday season or before Christmas. If this happens, in a graph, the demand graph will shift out. An increase in the demand while the supply remains the same, means there is excess demand of PS3 in the market. This means there are a lot of people who want to buy the PS3 but there are too little in the market or insufficient amount supplied. If this happens, the price will increase. (this is very normal in economics, when there exists excess demand the value of the good increases). The increase in the price, will thus form the new equilibrium price and quantity. We can say that the excess demand caused the price of PS3 to increase, and only a few can purchase it. This is one example of the interaction of demand and supply to determine the equilibrium price and quantity. At times, it's not only the demand that can affect the price and quantity. There are times where the supply can affect the price of a good. If excess demand causes the price to increase, excess supply, meaning a surplus of goods in the market. will mean the price will eventually fall. What you need to understand is the use of demand and supply to determine the price and quantity is a model. This demand and supply model is used to basicly understand the relationship between price and quantity and factors that can affect it.
Wiki User
∙ 9y ago
Wiki User
∙ 15y agoReffering to a DEMAND & SUPPLY GRAPH. When the demand curve intersects with the supply curve, we get the new equilibrium and new quantity. In order to find out the value of the new equilibrium and quantity you create a new line starting from where the NEW supply and demand curves intersect, to the end of the graph(HORIZONTALLY TO THE LEFT AND VERTICALLY DOWN). It should look like this:
Wiki User
∙ 11y agoAssuming somewhat-general functional forms, supply and demand determine price and quantity by isolating the unique equilibria where producers and consumers agree to exchange commodities.
Wiki User
∙ 11y agoI just finished my final on this. The equilbrium or where the supply and deman meets is the resulted price hopes this helps I'm only in 7thgrade
Wiki User
∙ 11y agosmd
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How price adjustments eliminate a shortage?
The price will increase , Demand will decrease and Supply will increase until reach the equilibrium point
Explain how labor market equilibrium is affected by the supply and demand of labor in a Monopolistic Competition?
The labor market will reach equilibrium as the amount of workers willing to work for a certain price equals the amount of workers employers are willing to hire for that wage. On a supply and demand curve the employees represent the suppl side while the employers represent the demand side
Why is it difficult to judge elasticity of demand or supply if you are merely observing the appearance of a demand or supply curve on a graph?
Because it is basically curved shape, therefore, there are points/areas on the curve where the demand or supply will be elastic and on some other parts be inelastic. At the top of the curve, demand/supply tends to be inelastic and at the bottom of the curve, it tends to be elastic. Obviously, the more you go up the more we reach the perfectly inelastic demand/supply and the further you go down the curve, the more you reach the perfectly elastic demand/supply
What were Adam Smith's 3 laws of economics?
1) People act in own self-interest (but it's okay because everyone gains) 2) Competition- in free market have to compete to survive 3) Supply and Demand- if quantity is above demand then have to lower prices or just not sell until things reach equilibrium
How does price ceilings affect supply and demand?
A price ceiling prevents a price from rising above the ceiling. It represents an upper limit on the price of something. If wheat has a price ceiling of $400 per metric tonne, $400 is the highest amount any what supplier can charge. If the market price for wheat is below the ceiling, say $200 in this example, then the ceiling has no effect on prices; the ceiling is not binding. If the market price is higher than the ceiling, supply and demand cannot reach equilibrium and there is a shortage in the commodity. Artificially low prices result in demand that exceeds supply. The price, however, remains stuck at the ceiling.
How price adjustments eliminate a shortage?
The price will increase , Demand will decrease and Supply will increase until reach the equilibrium point
Why do producers obey the law of supply?
They want to make profit. And they do so by looking out for an equilibrium. In order to reach such an equilibrium between demand and supply, they need to obey the law of supply first. Or else they will not make any profits at all.
Why producers obey the law of supply?
They want to make profit. And they do so by looking out for an equilibrium. In order to reach such an equilibrium between demand and supply, they need to obey the law of supply first. Or else they will not make any profits at all.
Explain how labor market equilibrium is affected by the supply and demand of labor in a Monopolistic Competition?
The labor market will reach equilibrium as the amount of workers willing to work for a certain price equals the amount of workers employers are willing to hire for that wage. On a supply and demand curve the employees represent the suppl side while the employers represent the demand side
How do you reach equilibrium fast?
Simply use a catalyst if you don't want to change the position of the equilibrium.
What effects do catalysts have on an equilibrium system?
They catalyse both the forward and reverse reactions, so the position of equilibrium is unaffected. The system will however reach equilibrium more quickly.
Why is it difficult to judge elasticity of demand or supply if you are merely observing the appearance of a demand or supply curve on a graph?
Because it is basically curved shape, therefore, there are points/areas on the curve where the demand or supply will be elastic and on some other parts be inelastic. At the top of the curve, demand/supply tends to be inelastic and at the bottom of the curve, it tends to be elastic. Obviously, the more you go up the more we reach the perfectly inelastic demand/supply and the further you go down the curve, the more you reach the perfectly elastic demand/supply
When will gold's price reach equalibrium?
Through a function of the economic principles of Supply and Demand - prices change depending on the desire for the item, and the supply of the item. Gold, specifically, may reach an equalibrium when the demand for gold lessens, or the supply for Gold increases.
What were Adam Smith's 3 laws of economics?
1) People act in own self-interest (but it's okay because everyone gains) 2) Competition- in free market have to compete to survive 3) Supply and Demand- if quantity is above demand then have to lower prices or just not sell until things reach equilibrium
How can a person reach equilibrium if they are hyperventilating?
Masturbation usually helps calm the mind and help it to reach equilibrium.
How can fads lead to shortages?
Demand increases so quickly and unexpectedly that time is needed for the quantity supplied and price to increase to reach new equilibrium point
What generalizations about an equilibrium constant can be made if the value for K is large?
It will take a short time to reach equilibrium It will take a long time to reach equilibrium The equilibrium lies to the right The equilibrium lies to the left Two of these One of those answers...
