11th Grade Economics
Microeconomic Challenges Facing Individuals and Organization
EC1002
Lesson 4
Market Equilibrium Notes
Role of competition:
 Competition among sellers results in…
 Competition among buyers results in…
 As a result, competition among buyers and sellers creates an
_________________________________ naturally, meaning without
___________________intervention or outside forces manipulating it.
Equilibrium –
 Definition:

Equilibrium exists when the quantity that consumers are willing and
able to buy __________________________________________that
producers are willing and able to sell.
 Graphically, equilibrium is the point at which the demand curve and the
supply curve ________________________.
Supply Schedule
Demand Schedule
Price
4
5
6
7
8
9
Price
4
5
6
7
8
9
Quantity Supplied
15
20
25
30
35
40
Quantity Supplied
35
30
25
20
15
10
11th Grade Economics
Microeconomic Challenges Facing Individuals and Organization
The State of Equilibrium is IDEAL
 Markets never stand still
 Recall the determinants of demand and supply
What would happen to the equilibrium price and quantity with an increase
in demand for coffee?
What would happen to the equilibrium price and quantity with a decrease in
supply for coffee?
Adapted from:
Foundation for Teaching Economics: Committed to Excellence in Economic Education. 23 Aug. 2009
<http://www.fte.org/teachers/programs/rightstart/curriculum/topic3/marketbasics.php>.
McEachern, William A. Contemporary Economics. Mason, Ohio: Thomson South-Western, 2005.
Mankiw, Gregory. Principles of Microeconomics Study Guide, Third Edition. New York: Holt Rinehart &
Winston, 2003.
EC1002
Lesson 4
11th Grade Economics
Microeconomic Challenges Facing Individuals and Organization
Exploring Equilibrium
Directions: Determine what happens to the equilibrium price and quantity
with each scenario below by determining the following
A. Who is affected? Buyer or Seller
B. What determinant is going on in the practice problem?
C. How does this change the equilibrium price and quantity?
1. There is an increase in the cost of wheat which affects the cost of
producing bagels at the local bakery. What happens to the equilibrium
price and quantity of bagels?
A.
B
C.
2. The Summer Olympics are scheduled to be in Rio de Janeiro in 2016.
What happens to the equilibrium price and quantity of hotel rooms in
Rio de Janeiro?
A.
B
C.
3. For the same Olympics in 2016, in anticipation, builders and investors
construct hundreds of new hotels. What will happen to the equilibrium
price and quantity of hotel rooms in Rio de Janeiro now?
A.
B
C.
4. The price of gasoline dramatically increases. What happens to the
equilibrium price and quantity of the public bus transportation?
A.
B
C.
EC1002
Lesson 4
11th Grade Economics
Microeconomic Challenges Facing Individuals and Organization
Part D: Graphing
Graph the change in equilibrium price and quantity from the four
problems on the previous page. Show how the demand curve or the
supply curve has shifted. Make sure to label your axes.
1)
3)
2)
4)
EC1002
Lesson 4