Market Equilibrium

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Market Equilibrium by Mind Map: Market Equilibrium

1. Quantity demanded(Qd) = Quantity supplied(Qs)

1.1. Equilibrium price

1.1.1. Price where Q=Pd = Ps

1.2. Equilibrium quantity

1.2.1. Quanity where Qd = Qs

2. Law of Market Forces

2.1. Surplus

2.1.1. Surplus is amount Qs > Qd

2.1.2. Price decreases

2.2. Shortage

2.2.1. Deficit is amount Qd > Qs

2.2.2. Price increases

3. Effects of Changes in Demand

3.1. Increase in demand

3.1.1. Price increases

3.1.2. Quantity increases

3.2. Decrease in demand

3.2.1. Price decreases

3.2.2. Quantity decreases

4. Effects of Changes in Supply

4.1. Increase in Supply

4.1.1. Price decreases

4.1.2. Quantity increases

4.2. Decrease in Supply

4.2.1. Price increases

4.2.2. Quantity decreases

5. Effect of Changes in both Demand & Supply

5.1. Change in same direction

5.1.1. both increase

5.1.1.1. Price may rise or fall

5.1.1.2. Quantity increases

5.1.2. both decrease

5.1.2.1. Price may rise or fall

5.1.2.2. Quantity decreases

5.2. Change in opposite direction

5.2.1. Supply increases & demand decreases

5.2.1.1. Price decreases

5.2.1.2. Quantity may rise or fall

5.2.2. Supply decreases & demand increases

5.2.2.1. Price increases

5.2.2.2. Quantity my rise or fall