In this lesson, we investigate how prices reach equilibrium and how the market works like an invisible hand coordinating economic activity. At equilibrium, the

In this lesson, we investigate how prices reach equilibrium and how the market works like an invisible hand coordinating economic activity. At equilibrium, the price is stable and gains from trade are maximized. When the price is not at equilibrium, a shortage or a surplus occurs. The equilibrium price is the result of competition amongst buyers and sellers.

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Sorry. I do not see the mistakes . Please shıow me . Thanks billion

If the price is higher than the equilibrium price, demand has to go down all things being equal.

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Ah that will be the subject of a later video I am sure but that is good you thought of this.

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Depends on growth rate of supply vs demand and which one is more elastic. In cases where growth is equal for supply and demand, if demand is more inelastic than supply, equilibrium price will fall and if demand is more elastic than supply, equilibrium price will rise. If supply and demand are equally elastic/inelastic, equilibrium price does not change. Quantity increases in all cases.

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Adam Smith uses the metaphor "invisible hand" in Book IV, Chapter II, paragraph IX of The Wealth of Nations.

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Demand would be a straight horizontal line, quantity demanded increases at the same price there will be no increase in demand so increase in price. Supply would be a straight vertical line with exactly that much of quantity to have an equilibrium. There is no incentive for supplier to supply more as there is no additional profit (marginal profit) by suppling more oil. So we come to a stagnant.

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Hi Joseph,
We do not offer individual homework help. Best of luck in your course.
Cheers,
Meg

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