In the previous articles we learned about the two sides of the market: supply and demand. So what's the point of learning about price and quantity demanded of suppliers and consumers? When we combine these ideas, we can understand the market as a whole!
Eq’m (Equilibrium) occurs at the price where quantity demanded = quantity supplied.
You may have noticed that our demand and supply graphs had the same Y-axis and X-axis. This allows us to combine the graphs to show the Market for a particular good.
Let’s continue to use our example of the white sneaker market.
Recall the demand schedule for white sneakers that shows the relationship between price and quantity demanded.
|Price of White Sneakers ($)||Quantity Demanded|
Also recall the supply schedule for white sneakers which shows the relationship between price and quantity supplied.
|Price of White Sneakers ($)||Quantity Supplied|
Now, let's plot these two schedules on the same graph.