Economics 100

Economics 100

How to Study for Class 5       Equilibrium

Class 5 introduces the concept of equilibrium price and equilibrium quantity.

1. Begin by looking over the Objectives listed below.   This will tell you the main points you should be looking for as you read the chapter.
2. New words or definitions are highlighted in italics in the text.   Other key points are highlighted in bold type. Answer the questions in the text as they are asked.   Then, check your answer by reading further in the text.
3. You have more work with the demand-supply graph in this chapter. In particular, you need to differentiate a movement along the demand or supply curve and a shift in the demand or supply curve. Be sure to go over every point so that you can see how they are derived.
4. Do the three cases involving a change in equilibrium very carefully. Go over the explanations   step-by-step.   Then, try the three cases at the end of the chapter. In each case, draw the graph.
5. You will be given an In Class Assignment and a Homework assignment to illustrate the main concepts of this chapter. When you have finished the text and the assignments, go back to the Objectives.   See if you can answer the questions without looking back at the text.   If not, go back and re-read that part of the text. Then, try the Practice Quiz for Class 5.

Objectives for Class 5         Equilibrium

At the end of class 5, you will be able to:
1.   Explain   "equilibrium"?   How are the equilibrium price and quantity determined?
2. If the price is above (or below) equilibrium, explain what will result?
3. Explain what will happen to the price and the quantity in each of the following cases (as well as why this will happen):
      a.   there is an increase in demand or a decrease in demand
      b.   there is an increase in supply or a decrease in supply
4. Explain what will happen to the price and the quantity in each of the following cases, as well as why it will happen:
      a.   both demand and supply rise...