Chapter 1 Linear Equations And Graphs Worksheet With Answers Page 27
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37Supply and Demand
In a free competitive market, the price of a product is
determined by the relationship between supply and
demand.
•
If there is a surplus, the price tends to come down.
•
If there is a shortage, the price tends to go up.
•
The price tends to stabilize at the point of intersection
of the demand and supply equations.
This point of intersection is called the equilibrium point.
The corresponding price is called the equilibrium price.
The common value of supply and demand is called the
equilibrium quantity.
Barnett/Ziegler/Byleen Business Calculus 12e
27
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