Market Clearing Price

Economics, Chapter Five Market Clearing Price (Balance in the Market)

Market-Clearing Price (MCP)/ Equilibrium Price (e) ,[object Object],[object Object],[object Object],$30 s $25 $20 $15 MCP $10 $5 d $0 1 2 3 4 5 6 7

When Supply ≠ Demand ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

When Supply ≠ Demand ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Role of Prices ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Changes in Price & Production ,[object Object],[object Object],[object Object],[object Object],[object Object]

Changes in Price & Production (cont’d) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Changes in Price & Production (cont’d) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Reasons for M.C.P.  ,[object Object],[object Object],[object Object]

Price Quantity Demand Supply Market Clearing or Equilibrium Price P 1 P 2

Price Quantity Demand Supply Market Clearing or Equilibrium Price P 1 Q 1 P 2 Q S Q D Shortage

Price Quantity Demand Supply Market Clearing or Equilibrium Price P 1 Q 1 P 2 Q S Q D Surplus

Market Clearing Price

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