1. Putting it all together
MARKET EQUILIBRIUM
Putting it all together

2. Market Equilibrium
A market brings together those who are willing and able to supply the good (SUPPLY) and those who are willing and able to purchase the good (DEMAND).
In a competitive market, where there are many buyers and sellers, the price of the good serves as a rationing (regulating) mechanism. 

3. MARKET EQUILIBRIUM

4. CONSUMER SURPLUS

5. So what can we say about this?

6. PRODUCER SURPLUS

7. DISEQUILIBRIUM

8. DISEQUILIBRIUM

9. EQUILIBRIUM

10. SHIFTS IN EQUILIBRIUM DEMAND

11. SHIFTS IN EQUILIBRIUM DEMAND

12. SHIFTS IN EQUILIBRIUM SUPPLY

13. SHIFTS IN EQUILIBRIUM SUPPLY

14. LET’s TRY THESE !!!

15. CALCULATING EQUILIBRIUM
SOLVE P and Q

16. CALCULATING EQUILIBRIUM

17. SOLUTION [QUANTITY]

18. SOLUTION [PRICE]

19. SHOWN GRAPHICALLY

20. PRICE FLOORS AND PRICE CEILINGS
Price floors  benefit the producers
A price floor sets a minimum price for which the good may be sold. 
To be effective, a price floor would need to be above the market equilibrium. 

21. PRICE FLOORS

22. Price ceilings benefit the consumer
set a maximum price for which the product may be sold.
To be effective, the ceiling price must be below the market equilibrium.

23. PRICE CEILING

24. EQUILIBRIUM
In a competitive market, the economic surplus which is the combined area of the consumer and producer surplus is maximized.