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ECON 101- Equilibrium Prices and Quantities.

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CH 6 NCEE STUDENT ACTIVITIES Equilibrium Prices and Quantities A fundamental assumption of economics is that people behave rationally. Buyers and sellers, therefore, enter into exchange situations t ... hat they believe will be beneficial to them. Equilibrium is the point at which the supply and demand curves cross; at this point, the quantity demanded and the quantity supplied are equal. The price indicated at that point is the price one sees in the market, and the quantity illustrates the amount produced. FANTASTIC FLYING DISC EQUILIBRIUM Below is a table indicating the demand for and the supply of Flying Discs. Plot these data on the graph provided. Label the demand curve D, the supply curve S, and the equilibrium point E. Then answer the questions that follow by filling in the blanks or underlining the correct word in the parentheses. Demand & Supply of Flying Discs 1. Under these conditions, competitive market forces will tend to establish an equilibrium price of $ __$3____ per Flying Disc and an equilibrium quantity of _200 m.___Flying Discs. 2. If the current prevailing price on the market is $4 per Flying Disc, buyers would want to purchase __150___ Flying Discs, and sellers would want to sell __250__Flying Discs. 3. Under these conditions, there would be a (shortage, surplus) of ___surplus____ Flying Discs. 4. Competitive market forces would tend to cause the price to (increase, decrease) to a price of $ _$3_____ per Flying Disc. 5. At this new price, buyers would now want to purchase ___200___ Flying Discs, and sellers would want to sell __200____ Flying Discs. 6. Because of this change in (price, underlying conditions), the (demand, quantity demanded) changed by _____50_____ Flying Discs. 7. If the currently prevailing price on the market is $2 per Flying Disc, buyers would want to purchase _250___ Flying Discs, and sellers would want to sell __150__ Flying Discs. [Show More]

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