Equilibrium Price and Intermarket Relationships
The price where demand and supply meet, how excess demand and excess supply push the price back to equilibrium, and how linked markets for substitute and complementary goods affect each other.
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Where price settles ⚖️
In a market, the price does not stay just anywhere. It settles at the equilibrium price, the price where the quantity that buyers want to buy equals the quantity that sellers want to sell. At that price the market clears, meaning there are no goods left over and no buyers left waiting.
Words for pricing 🔑
Learn these four terms before you study how the price settles.
Too low or too high 🆚
When the price is not at equilibrium, pressure builds to move it back.
Grade 9 thinking 💡
Top answers trace the whole chain. For excess supply, say that unsold goods pile up, so firms cut the price, so more buyers return, until demand equals supply again. Never just name the term without the steps that follow it.
Match the term 🔗
- equilibrium price
- excess demand
- excess supply
- substitute good
- the price where demand equals supply
- when demand is greater than supply
- when supply is greater than demand
- a good that can be bought instead of another
Match the change to its effect 🧩
- a price set above the equilibrium
- a price set below the equilibrium
- the price of coffee rises
- the price of cars rises
- excess supply builds up, so the price falls
- excess demand builds up, so the price rises
- demand for tea, a substitute, rises
- demand for petrol, a complement, falls
What is equilibrium price? ❓
What is the equilibrium price?
- The price where the quantity demanded equals the quantity supplied.
- The highest price a firm can charge.
- The lowest price in the market.
Spot the substitutes ✅
Select the TWO pairs of substitute goods.
- Tea and coffee.
- Butter and margarine.
- Cars and petrol.
- Printers and ink.
Order the adjustment 🪜
An interactive activity.
Summarise how price settles 📝
The _____ price is the price where demand equals supply, so the market clears. If the price is too low there is _____, and the price is pushed up. If the price is too high there is _____, and the price is pushed down. Goods bought instead of each other are _____ goods, while goods used together are _____ goods.
Count at equilibrium 🔢
An interactive activity.
Find the complements 🖍️
An interactive activity.
Substitute or complement? 🧭
An interactive activity.
Explain a price change ✍️
An interactive activity.