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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.
What else can I help you with?
How price adjustments eliminate a shortage?
The price will increase , Demand will decrease and Supply will increase until reach the equilibrium point
How does the relationship between quantity supplied and price impact market equilibrium?
The relationship between quantity supplied and price impacts market equilibrium by influencing the point where supply and demand intersect. When the quantity supplied is higher than the quantity demanded, prices tend to decrease to reach equilibrium. Conversely, when the quantity supplied is lower than the quantity demanded, prices tend to increase to reach equilibrium. This dynamic process helps ensure that supply and demand are balanced in the market.
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 is equibillium mantained?
Equilibrium is maintained through a balance of opposing forces or factors. In economics, for example, supply and demand reach an equilibrium point where the quantity supplied equals the quantity demanded. Any changes in factors affecting supply or demand can cause the equilibrium to shift.
How price adjustments eliminate a shortage?
The price will increase , Demand will decrease and Supply will increase until reach the equilibrium point
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.
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.
How does the relationship between quantity supplied and price impact market equilibrium?
The relationship between quantity supplied and price impacts market equilibrium by influencing the point where supply and demand intersect. When the quantity supplied is higher than the quantity demanded, prices tend to decrease to reach equilibrium. Conversely, when the quantity supplied is lower than the quantity demanded, prices tend to increase to reach equilibrium. This dynamic process helps ensure that supply and demand are balanced in the market.
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?
To reach equilibrium faster, you can increase the concentration of reactants, raise the temperature (if it's an endothermic reaction), decrease the volume (for gases), or use a catalyst to speed up the reaction rate. It's important to remember that altering these factors can only help reach equilibrium faster, not change the position of the equilibrium itself.
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 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.
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
What are the key differences between long run and short run equilibrium in economics?
In economics, the key difference between long run and short run equilibrium is the time frame in which adjustments can be made. In the short run, some factors are fixed and cannot be changed, leading to temporary imbalances in supply and demand. In the long run, all factors are variable, allowing for adjustments to reach a stable equilibrium.
