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Inyang Umoh (tutor)
09-02-2016 06:38:00 +0000
The concept of equilibrium is often tested on JAMB and other exams. So lets take a quick look into this topic.
Shortage - In a market whenever the amount of the product consumers want to buy (quantity demanded) is greater than the amount producers want to sell (quantity supplied), there is a shortage in the market.
Surplus - Conversely, whenever the quantity demanded is less than the quantity supplied, there is a surplus.
Equilibrium - The equilibrium price is the only price where the consumers and producers agree — that is, where the amount of the product consumers want to buy (quantity demanded) is equal to the amount producers want to sell (quantity supplied).
This common quantity is called the equilibrium quantity. At any other price, the quantity demanded does not equal the quantity supplied, so the market is not in equilibrium at that price.
Can anyone provide examples in their everyday lives of a shortage, surplus and an market that's in equilibrium?