Market Equilibrium
✏️ In one line
Equilibrium is the price at which the amount buyers want equals the amount sellers offer.
📖 Story time
- At the kite festival, Meera sells kites.
- At ₹50 a kite, buyers want only 20 but she has 70. Kites are left over (a surplus), so she lowers the price.
- At ₹10, buyers want 60 but she offers only 10. Kites run out (a shortage), so the price goes up.
- At ₹30, buyers want 40 and she offers 40. Everyone is matched. That is the equilibrium price.
🎯 Your turn
Find the equilibrium! Slide the price until the kites buyers want equal the kites Meera offers.
Nice! At ₹30, demand = supply = 40 kites. Where the two curves cross is the equilibrium.
Not quite. Hint: Watch the two bars. You want them the same height.
At a price, sellers offer more than buyers want. What is this called, and what happens to price?
Nice! Correct. Extra goods pile up (surplus), so sellers cut prices to sell them.
Not quite. Hint: Think of Meera's leftover kites at ₹50.
When there is a shortage (excess demand), the price tends to rise.
Nice! True. Many buyers chase few goods, so sellers can charge more.
Not quite. Hint: What happens to ticket prices when everyone wants one?
Arun: A stadium has 1,000 seats for a cricket final. At ₹500 a ticket, 5,000 fans like Arun want one.
What is happening here?
Nice! Yes. 5,000 want, 1,000 available: a shortage. That's why such tickets often sell for much more.
Not quite. Hint: Compare 5,000 and 1,000.