1. Chapter 6 Combining Supply and Demand

2. Equilibrium- where the supply and demand curves cross. Equilibrium determines the price and the quantity to be made and consumed of a good/service. A price which is higher than the market equilibrium price will cause a surplus. A price below equilibrium will cause a shortage.

3. A supply shift to the right causes the equilibrium price to fall and the equilibrium quantity to increase. A supply shift to the left causes the equilibrium price to rise and the equilibrium quantity to decrease.

4. A shift in demand to the left causes equilibrium price to fall and equilibrium quantity to decrease. A shift in demand to the right causes equilibrium price to rise and equilibrium quantity to increase.