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2. How are surplus and shortage related to equilibrium price?

3. Why is equilibrium price represented by the intersection of the supply
and demand curves in a particular market?
4. Why do changes in demand or supply cause disequilibrium?
5. Why is the market always moving toward equilibrium? in book of economics

User Mike Feltman
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1 Answer

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Answer:

1-A surplus exists when the price is above equilibrium, which encourages sellers to lower their prices to eliminate the surplus. A shortage will exist at any price below equilibrium, which leads to the price of the good increasing.

2-The supply curve shows quantity supplied at various prices, and the demand curve shows quantity demanded at various prices, so at the intersection of the two curves, these quantities and prices are equal. Therefore, equilibrium price is represented by the intersection of the supply and demand curves.

3-Changes in demand or supply cause disequilibrium because they create an imbalance between quantity demanded and quantity supplied.

4- The market is always moving towards equilibrium because if the price is too high, there is a surplus and prices tend to fall until the surplus is sold and equilibrium is reached, and if the price is too low, there is a shortage and producers raise prices and increase quantity supplied.

Step-by-step explanation:

:)

User Swanand
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