Answered: What is a Market Equilibrium? Using the…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter4: The Market Forces Of Supply And Demand

Section: Chapter Questions

Problem 8PA

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a. What is a Market Equilibrium? Using the given demand and supply schedule, draw market equilibrium and show the equilibrium price and quantity.

supply and demand for pizza
price Quantity Quantity
demanded supplied
(pizza per (pizza per
($per pizza) semester) semester)

10 0 40
8 10 30
6 20 20
4 30 10
2 40 0
0 125 0

b. How will the market equilibrium of pizza market alter if,
i. There is an increase in the pocket money of the students.
ii. Price of cheese gets lowered.
iii. Price of burgers get is reduced.
iv. Use of Electric Oven makes it easy to prepare pizza.

Definition Video Formula Definition Phenomenon in which market supply and demand balance each other. Market equilibrium is the economic state in which the market demand curve intersects the market supply curve, giving us the equilibrium price and equilibrium quantity for which a commodity can be sold and purchased in an economy. When market equilibrium is achieved, it suggests that all resources have been allocated efficiently and that there is just a distribution of income and resources in the economy. Video Formula

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