1.6 Market Equilibrium, Disequilibrium, and Changes in Equilibrium
Equilibrium is where quantity demanded equals quantity supplied; surpluses push price down, shortages push it up, and curve shifts move the equilibrium.
Market equilibrium is the price where quantity demanded equals quantity supplied — the intersection of the two curves. Above that price sellers can't sell everything (a surplus, or excess supply) and price gets bid down; below it buyers can't buy everything (a shortage, or excess demand) and price gets bid up.
A single shift gives clean predictions: demand right raises both price and quantity, demand left lowers both; supply right lowers price and raises quantity, supply left raises price and lowers quantity.
When BOTH curves shift, one outcome is always indeterminate without knowing the shift sizes. Demand and supply both increasing guarantees higher quantity but ambiguous price; demand up and supply down guarantees higher price but ambiguous quantity. Write 'indeterminate' — guessing a direction costs the point.
Key terms for 1.6
Drag the curves yourself — the fastest way to make 1.6 stick.
Giving a definite answer for both price and quantity in a double-shift question. When both curves move, one of the two is indeterminate unless the question states the relative sizes of the shifts.
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