Now we can consider supply and demand in their unity, find out how they interact, and show how market prices are established as a result of this interaction.

Conditions of perfect competition

It is first necessary to stipulate that all further considerations refer to the conditions of perfect competition, under which big number sellers interact with a large number of buyers, all of them have equal rights in their actions and none of them individually can influence the price, because they buy or supply to the market only a small part of the total quantity of the product.

What price will be established on the market as a result of the interaction of supply and demand? To answer this question, let’s summarize the demand scale and the supply scale into a single table. Let's look at the data in Table 2. It presents seven price levels, which correspond to seven demand quantities and seven supply quantities.

Table 2. Demand, supply and market price.

At which of the seven designated price levels will these goods be sold? Let's try to determine this by trial and error:

at a price of 15 rubles, there is a shortage of 30 units of goods, at a price of 20 rubles. - the shortage will decrease, but will still amount to 10 units of goods; at a price of 35 rubles, there is a surplus of production equal to 20 units; at a price of 30 rubles, the surplus will decrease, but will still amount to 10 units of goods. And only at a price of 25 rubles. there will be no surplus or shortage. At this price, the number of units of the good that sellers will bring to the market will be equal to the quantity that buyers are willing and able to buy.

Equilibrium price

Thus, at a price of 25 rubles. the amount of demand coincides with the amount of supply, i.e. it will be achieved supply and demand balance. This price is called equilibrium price, i.e., at this price, the decisions of buyers to buy and sellers to sell are mutually consistent.

EQUILIBRIUM PRICE– the price at which the quantity of goods (services) offered by sellers coincides with the quantity of goods (services) that buyers are willing to buy.

On the graph, the equilibrium price corresponds to the equilibrium point obtained as a result of the intersection of the demand curve and the supply curve (see Fig. 13).

Balancing price function

The ability of the competitive forces of supply and demand to set price at a level at which buying and selling decisions are synchronized is called balancing price function.

In conditions of perfect competition, surplus and deficit in the market are temporary phenomena that can be quickly eliminated by the forces of market competition.

The supply and demand curves intersect at equilibrium point A.

This point corresponds to the equilibrium price - 25 rubles. - and the equilibrium quantity is 25 units of goods.

Suppose that producers went to the market with the intention of selling their goods at a price of 30 rubles. In this case, the quantity supplied would be 30 units. goods, but the quantity demanded would be only 20 pcs. In such a situation, competition develops between sellers, each of them strives to find its own buyer, and those who have lower production costs for the goods will lower the price earlier than others. Those producers whose costs are high cannot afford to sell their products at a price below 30 rubles, they will leave the market, and the supply will decrease. At the same time, with a reduced price, there will be a larger number of buyers who will be able to buy the product. The amount of demand will increase. In the figure, a decrease in the quantity of supply and an increase in the quantity of demand are shown by arrows that move along the demand and supply curves to the equilibrium point A. As the quantity of demand and the quantity of supply move to point A, the excess in the market decreases, and, finally, at point A it disappears completely , the quantities of supply and demand coincide.

Let us now imagine that buyers go to the market, planning to buy a product at a price of 15 rubles. At this price, the quantity demanded will be 40 pcs. goods, and the supply volume is only 10 units. There is a shortage of 30 pcs. goods. The shortage creates competition among buyers, and some of them, obviously having large incomes, will agree to purchase the goods at a higher price. high price, the rest will be forced to leave the market. This will lead to a reduction in the quantity demanded. But at the same time, an increase in price will increase the volume of supply. The lower arrows show the movement of the quantities of demand and supply towards each other, but upward, to the equilibrium point A. At this point, the deficit will be completely eliminated, the volume of demand and the volume of supply will coincide.

MARKET REACTION TO CHANGES IN DEMAND AND SUPPLY

The equilibrium price cannot remain unchanged for a long time. The same market forces that led to its establishment will also cause its change. We have already found out that many factors lead to changes in supply and demand, which will be expressed in a shift in the demand and supply curves, either only one of them in one direction or the other, or both at once in the same or opposite directions. These movements in the supply and demand curves will inevitably cause a change market equilibrium, and hence the equilibrium price.

Let's look at specific examples.

Fig. No. 14.	Fig. No. 15.

Change in demand(offer remains unchanged) - fig. 14 .

Demand is increasing. The demand curve shifts to the right, this leads to an increase in both the equilibrium price (P 1 > P 0) and the equilibrium quantity (Q 1 > Q 0).

Demand is decreasing. The demand curve c moves to the left, which leads to a decrease in the equilibrium price (P 2< Р 0), и равновесного количества (Q 2 < Q 0).

Change of offer(demand remains unchanged) – fig. 15 .

The supply is increasing. The supply curve shifts to the right. This leads to a decrease in the equilibrium price (P 1< Р 0), но увеличению равновесного количества (Q 1 >Q 0).

Supply is dwindling. The supply curve shifts to the left. This leads to an increase in the equilibrium price (P 2 > P 0), but a decrease in the equilibrium quantity (Q 2

In the cases considered, only one curve shifted - either demand or supply, when either the determinants of demand or the determinants of supply came into play. For example, in the first example, a shift in the market equilibrium could occur under the influence of an increase or decrease in the income of buyers, and in the second example, due to an increase or decrease in the number of producers.

But in real life There are often cases when factors that change both demand and supply operate simultaneously. For example, an increase in customs duties can cause a decrease in the supply of imported goods, and an increase in household incomes can lead to a simultaneous increase in demand for them.

Let us consider cases of simultaneous changes in both demand and supply. There are several options here.

1. Supply and demand change in the same direction.

a) Demand and supply increase simultaneously and equally(Fig. 16). In this case, only the equilibrium quantity will change in the direction of its increase (Q 1 > Q 0), and the equilibrium price will remain the same.

b) Demand and supply are reduced simultaneously and equally ( rice .17). With a simultaneous reduction in supply and demand, the equilibrium price will not change, but the equilibrium quantity will decrease (Q 1< Q 0).

2. Supply and demand move in different directions

a) Demand increases and supply decreases in the same proportion(Fig. 18). A simultaneous increase in demand and a decrease in supply will not change the equilibrium quantity, but will lead to an increase in the equilibrium price (P 1 > P 0).

b) Demand decreases and supply increases in the same proportion(Fig. 19). In this case, the equilibrium quantity will also not change, but the equilibrium price will decrease (P 1< Р 0).

One more circumstance must be taken into account. In all cases of simultaneous changes in demand and supply, we assumed that these changes occur in the same proportion, that is, that supply and demand, say, increase by 2 times or supply increases and demand decreases by 1.5 times. But in real life this rarely happens. It is typical that these changes occur to an unequal extent. For example, demand increased by 2 times, and supply decreased by 1.3 times, etc.

IMPACT OF EXTERNAL FORCES ON MARKET EQUILIBRIUM. DEFICIT AND SURPLUS

In conditions of perfect competition, the market quickly copes with the problem of surplus and shortage. However, in real life, having both is not such a rare occurrence. What causes them?

Deficit and surplus exist where the forces of market competition are suppressed by someone, someone interferes with their action. This “someone” can most often be the state and monopolies.

Let's consider the consequences of government intervention in the market mechanism.

Price ceiling and commodity shortage.

Before the start of market reforms in our country, the state centrally set prices for the vast majority of goods produced in the country, including agricultural products. Since the level of labor productivity in agriculture The USSR was very low and costs were high, so the equilibrium price, determined by market forces, would have been set at quite high level. The state, wanting to make agricultural products accessible to consumers with low incomes, set a price “ceiling”. The price could not rise above the established “ceiling” in state stores. For example, if we assume that the equilibrium price of 1 kg of beef would be established in the market at the rate of 4 rubles, then the state fixed it at the level of 2 rubles. and it was impossible to sell it at a higher price in state stores.

What did this lead to? Let's look at the graph (Fig. 20). At a price level of 2 rubles. the quantity of demand will be measured by the segment OQ 2, and the quantity of supply - QQ 1, i.e. the volume of demand will exceed the equilibrium quantity (OQ 2 > OQ 0), and the volume of supply will be below it (QQ 1

Fig. No. 20.

“Ceiling” of prices and the formation of shortages.

Setting the government price at a level below the equilibrium price leads to the formation of a shortage. If the equilibrium price is equal to 4 rubles, and the state price is equal to 2 rubles, then the value of the deficit corresponds to the length of the segment Q 1 Q 2.

In this situation, the state is forced to either come to terms with the fact that meat has disappeared from store shelves, long queues are constantly lining up for it, and a considerable part of the population goes for meat and sausage to the capital cities, where it arrives first. Speculation arises - an inevitable companion to shortages. The prices of the speculative market are higher than the equilibrium ones, since the costs will now include payment for the risk: illegal sales “under the counter” are punishable.

Or in this case, the state will be forced to resort to rationed distribution of scarce products, selling them on cards. However, this does not solve the problem, because producers still have no incentive to expand production of the missing goods due to the prices imposed on them, which are below equilibrium.

Minimum price and surplus of goods.

Prices for agricultural products are also regulated by the governments of most countries with developed market economies. But the situation here is exactly the opposite. The level of agricultural production in the United States and Western European countries is such that it is not only enough to feed the population of the producing countries. A significant part of these products is exported. High supply leads to a fairly low equilibrium price. If farmers sold their products at market prices, then a significant part of them, having high costs, would be doomed to ruin, which would lead to increased unemployment and social conflicts.

Fig. No. 21.

"Floating" prices and the formation of surplus.

Setting a minimum price level that is higher than the equilibrium price leads to the formation of a surplus of goods. If the equilibrium price is equal to P 0 , and the price set by the state should not be lower than P 1 , then a surplus arises, the value of which corresponds to the segment Q 1 Q 2 .

The states of developed countries, not wanting to allow a large number of farms to go bankrupt, set a price “floor,” i.e., they fix the price at a level above the equilibrium. What this leads to can be seen by referring to the graph (Fig. 21).

At a price above the equilibrium value, the quantity of supply will be QQ 2, and the quantity of demand will be QQ 1, i.e., the volume of supply will exceed the volume of demand, and a surplus will be formed, the value of which corresponds to the segment Q 1 Q 2.

Under such circumstances, the state is forced to buy this surplus production from farmers or pay them subsidies for reducing the amount of sown areas. In both cases, the money is taken from the pockets of taxpayers. Therefore, heated debates often flare up whether it is necessary to pursue a policy of regulating prices for agricultural products or whether it is better to spend taxpayers’ money on retraining bankrupt farmers and finding them jobs. This problem goes beyond the development of just one industry. Maintaining the solvency of farmers ensures guaranteed demand for industrial products for agriculture and services for rural areas, and, consequently, employment in related industries and the preservation of socio-political stability in countries.

The purpose of studying the topic is to find out: - what is supply and demand, market equilibrium, determinants of supply and demand.

When studying the topics of the work, the concepts of “demand”, “supply”, “magnitude of demand”, “magnitude of supply”, “market equilibrium”, determinants of supply and demand, etc. are revealed.

When studying the topics “Demand” and “Supply”, you need to remember from the Algebra course the topics “Increasing and decreasing functions”, “Direct and inverse dependence of functions”, “Linear functions”.

Before answering the test questions, you should remember the definitions of the concepts discussed in the task, the factors influencing changes in supply and demand, and it is also advisable to construct dependence graphs in order to visually analyze them.

Please note that in questions about assignments on topics 2 of work, a short-term period is considered! In this case, the factors of production cannot be changed according to the terms of the assignment, since they cannot change over the period of time under consideration; in the long run, all factors are variable.

Keep this in mind when determining the correct answer!

This is a state of the economy in which markets for all goods are in simultaneous equilibrium. In fact, we are talking about the macro level of economic analysis.

General equilibrium models are, of course, ideal, like any other model in general. They are created in order to understand the reasons for the discrepancy between essence and phenomenon, to assess the strength and direction of action of factors that deviate the real process from the ideal state.

Among the many models of general market equilibrium, special mention should be made of the model of the representative of the mathematical (“Swiss”) school, L. Walras. Being macroeconomic in form, it is based on microeconomic indicators.

Walras compiled a system of equations, each of which ensures the equality of supply and demand on the market for a particular product. By solving a system of interconnected equations, they find the value of all unknown quantities - equilibrium prices and equilibrium volumes in the markets of all goods simultaneously. When conditions of perfect competition are met in all markets, the general market equilibrium is called general competitive equilibrium. L. Walras's model is designed precisely for the existence of a general competitive equilibrium.

Creating his model, L. Walras tried to give answers to the following questions: in the event of equilibrium in consumer goods markets, should there be equilibrium in resource markets, are the equilibrium prices found in this way the only possible solution, does the market mechanism ensure the achievement of general equilibrium, is the achieved Is the equilibrium stable?

And although Walras’s critics made a lot of effort to prove that the Walrasian model itself does not give affirmative answers to these questions and is of little use for specific analysis, many famous economists consider his creation “the highest achievement in the field

economic theory", "Magna Carta of exact economic science" (J. Schumpeter).

Having proved that the problem of finding a general economic equilibrium can be solved in principle, Walras tried to show how the market itself solves this problem - “by touch”, in the process of trial and error, by making adjustments in different markets, “pushing” the economy to an equilibrium state. Another famous economist, F. Edgeworth, proposed his concept of bringing the economy to an equilibrium state, the so-called theory of “renegotiation of contracts.”

• Based on Keynesian macroeconomic theory, M. Kaletsky set the task of finding another, different from the neoclassical, explanation of the principles on which national income is distributed among factors of production. In particular, he believed that the assertion that the dimensions wages determined by the marginal productivity of labor. The essence of his theory of distribution can only be understood by studying a course in macroeconomics. This topic discusses only models built on a microeconomic basis (L. Walras. V. Pareto, etc.). Although dissatisfaction with production functions and marginal analysis in general is traditionally present in the works of neo-Keynesian economists, there have been practically no serious attempts to construct an integral, comprehensive microeconomic theory on another, for example, neo-institutional basis (see: Dengov V.V. Contract theory: achievements and problems on the way to a new economic paradigm. St. Petersburg: OCEiM, 2006).

Market equilibrium - the state of the market with equality of demand and supply marriage. Market equilibrium:

1. is established as a result of the interaction of households’ decisions to purchase a product and producers’ decisions to sell it;

2. expressed in the equilibrium price of the product and in its quantity actually sold on the market.

Market equilibrium

Market equilibrium is a situation in the market when the demand for a product is equal to its supply; The volume of the product and its price are called equilibrium.

Market equilibrium is characterized by equilibrium price and equilibrium volume.

Equilibrium price (equilibrium price)-- the price at which the volume of demand in the market is equal to the volume of supply. Sazhina M.A., Chibrikova G.G. Economic theory: Textbook for universities. - M.: Publishing House NORM, 2003, p. 48. On the graph of supply and demand, it is determined at the point of intersection of the demand curve and the supply curve.

Equilibrium volume (equilibrium quantity)-- the volume of demand and supply of a product at the equilibrium price.

Mechanism for achieving market equilibrium

The free movement of price in accordance with changes in supply and demand leads to the fact that goods sold in the market are distributed in accordance with the ability of buyers to pay the price offered by the manufacturer. If demand exceeds supply, then the price will rise until demand no longer exceeds supply. If supply is greater than demand, then in a perfectly competitive market the price will decrease until all the goods offered find their buyers.

Types of market equilibrium

Equilibrium can be stable or unstable.

If, after an imbalance, the market returns to a state of equilibrium and the previous equilibrium price and volume are established, then the equilibrium is called stable.

If, after disequilibrium is disturbed, a new equilibrium is established and the price level and volume of supply and demand changes, then the equilibrium is called unstable.

Types of stability:

1. Absolute;

2. Relative;

3. Local (price fluctuations occur, but within certain limits);

4. Global (Set for any fluctuations).

The equilibrium price functions are as follows:

1. Distribution;

2. Informational;

3. Stimulating;

4. Balancing.

Equilibrium in the goods market

Equilibrium in an economic system is a state in which each participant in this system does not want to change his behavior.

In the market for a good, the actors are sellers and buyers who decide to sell or buy a certain amount of a good depending on its price. Equilibrium in the market occurs if all sellers and buyers can buy or sell the amount of good that they want to buy or sell.

Equilibrium in the market is a situation when sellers offer for sale exactly the same amount of good that buyers decide to purchase (the volume of demand is equal to the volume of supply).

Since sellers and buyers want to sell or buy different quantities of a good depending on its price, market equilibrium requires that a price be established at which the volumes of supply and demand coincide. In other words, the price equalizes the volumes of supply and demand.

The price that causes the volumes of supply and demand to coincide is called the equilibrium price, and the volumes of demand and supply at this price are called the equilibrium volumes of supply and demand.

In equilibrium conditions, the so-called clearing of the market occurs = there will be no unsold good or unsatisfied demand left on the market (buyers who want to buy the good at the established price and who were unable to do so due to the lack of sellers).

Thus, in order to find equilibrium in the market for a certain good, it is necessary to determine what price will cause in this market such a volume of supply that will correspond to the volume of demand = at this price, sellers will bring to the market exactly as much of the good they produce as buyers want to take away. This price is called the equilibrium price, and the volume of demand and supply corresponding to it = the equilibrium volumes of supply and demand.

How to determine balance?

To do this, you need to use the demand and supply functions and determine at what price value the supply and demand functions will give the same values

Let us assume that curve D in Fig. 1 is the consumer demand curve. And the S curve is the supply curve.

The curves intersect at some point A (in other words, they have a common point A), which shows the equilibrium values ​​of price and quantity in this market. The point of intersection of the supply and demand curves is called the equilibrium point.

Rice. 1. Balance point

Accordingly, at any price value below the equilibrium one, the opposite picture will be observed. Sellers will want to slightly reduce the volume of supply, since a decrease in price means a decrease in the profitability of production. And buyers will want to increase their consumption, since a lower price means an increase in their purchasing power and a reduction in the “difficulty” of purchasing the product. As a result, there will be a supply shortage (excess demand) = there will be consumers on the market who would like to purchase some more quantity of goods at this price, while all the goods brought by producers have already been sold.

Can curves not intersect?

Could a situation arise when it is impossible to establish equilibrium in the market with positive values ​​of price and sales volume? In the language of graphs, this would mean that the curves do not intersect, or, in other words, do not have common points.

Rice. 2. Situations when market equilibrium does not arise.

In principle, such a situation is possible. We can imagine the existence of two cases where the supply curve is entirely above the demand curve.

The first case includes markets for goods, the production of which requires very high costs due to the high cost of the material (for example, chairs made of pure gold) or high labor intensity (a castle glued together from grains of sand). At the same time, not a single consumer will agree or simply will not be able (due to limited income) to pay for the production of these expensive goods. The supply curve will be much higher than the demand curve for these goods (Fig. 2. a). This means that market equilibrium occurs when price and quantity are zero = that is, a market for such goods simply does not exist.

In another case, the production of goods may not require large expenditures, but the goods themselves may be completely useless for consumers. For example, the production of tablespoons without handles is cheap = but who would want to buy these spoons even “for free”? Therefore, in this case, no matter how cheap the production of these goods is, the demand curve will either coincide with the vertical axis (which practically means its absence), or be so close to it that there will be no common points with the supply curve (Fig. 2. b).

Equilibrium mechanism

How is equilibrium established in the market? How do sellers and buyers determine that a certain price is the equilibrium price and begin to transact only at that price?

The mechanism for establishing a single price may vary depending on the characteristics of the particular market and its participants.

Let us assume that no transactions have been made on the market at all and that sellers and buyers do not know each other’s desires and capabilities. Thus, we must determine how equilibrium is established in the new market.

In such a new market, first trial transactions are made, as a result of which the first buyers somehow negotiate the price with individual sellers and purchase the good. There is some price dispersion. Since the market is perfect (according to our assumption), each subsequent buyer and each seller knows at what prices transactions have already been made and focuses on the most profitable ones. Buyers will strive to buy at the lowest price and will go to those sellers who offer that price. Sellers will strive to sell the product at a higher price, but will not be able to offer a higher price for the product than others = they will be left without a buyer. At the same time, if sellers see that at the established price their product is sold out too quickly and they will soon find themselves without goods, they will gradually raise the price. If they see that the goods will not sell out, they will begin to gradually reduce the price.

The speed with which the market finds the equilibrium price depends on the "mobility" of its participants and on the ease of information transfer in the market (that is, on the perfection of the market).

For example, if sellers do not know what demand will be presented for their product (if, for example, a market for a good has just appeared), they will first estimate the demand and produce the appropriate amount of the good. If their estimate is too low and the product produced is not enough for consumers at the price they charge, sellers will increase price and output in order to increase profits. If there is still unsatisfied demand, sellers will again increase price and output, etc. Thus, gradually equilibrium in the market will be established at the point of intersection of the supply and demand curves.

In all the following days, sellers and buyers will know at what prices transactions were made earlier, and, starting the trading day, they will be guided by “yesterday’s” price. The new price will be adjusted during the trading process.

The establishment of an equilibrium price occurs in a competitive market under the influence of general trends and specific features of both demand and supply. In Fig. 1 shows in the most general form the dynamic processes that occur in the sphere of movement of goods and prices.

Rice. 1. Graph of market equilibrium of supply and demand

Equilibrium market price- this is the price at which there is neither a surplus nor a shortage for any given product. It is established as a result of balancing supply and demand as the monetary equivalent of a strictly defined quantity of goods.

Supply and demand are balanced under the influence of the competitive market environment, as a result of which the price and quantity of goods sold at this price act as a result of the equilibrium of supply and demand. Other things being equal, the price corresponds to the quantity that buyers are willing to buy and sellers are willing to sell.

Intersection pointE- This is the equilibrium point between supply and demand. As shown in the equilibrium graph, any excess of a good delivered to the market “pushes” the price of the good down towards the equilibrium point. And vice versa, if there is a shortage or shortage of any goods on the market, then an upward trend arises, which “presses” the price of the missing goods upward, towards the same equilibrium point.

Ultimately, an equilibrium price P e will be established, at which Q e goods will be sold in a given market each year. this moment time. At each subsequent moment of time (during the day, week, month, year), market equilibrium can be established as a certain new value of the equilibrium price and the number of sales of the product at this price.

At the same time equilibrium- this is a market state in which Q d = Q s. Any deviation from this state sets in motion forces that can return the market to a state of equilibrium: eliminate the shortage (Q d > Q) or surplus of goods on the market (Q s< Q d).

The balancing function is performed by price, stimulating supply growth during shortages and “unloading” the market from surpluses, restraining supply. If demand grows, then a new, higher level of equilibrium price and a new, larger volume of supply of goods are established. Conversely, a decrease in demand leads to the establishment of a lower level of equilibrium price and a smaller volume of supply (Fig. 2, a, b).

Rice. 2. (a) Level of equilibrium with changing demand and constant supply

Figure 2. (b) Level of equilibrium with changing supply and constant demand

As can be seen from the graph, the balancing price function reveals its influence both through demand with constant supply, and through supply with constant demand.

With changing supply and constant demand, a different level of market equilibrium will also be established. Thus, an increase in supply will give a new point of lower equilibrium price with an increasing number of goods sold. If supply decreases, equilibrium will be established at a higher level with fewer sales of goods.

Equilibrium- a law for each competitive market, which allows maintaining the balance of the entire economic system as a whole.

Example of calculating equilibrium price

On the Moscow market of household appliances, the supply of domestic refrigerators was as follows: Q s = 15 000 4- + 2.4P, whereR- price, thousand rubles. for 1 refrigerator; Q s - supply volume, pcs. in a year. The demand for these refrigerators looked like this: Q d = 35 000 - 2.9 R.

The equilibrium price of domestic refrigerators can be established by balancing supply and demand for this product (Q s = Q d ).

Market equilibrium is a relationship between supply and demand in which the quantity of goods that buyers want to purchase corresponds to the quantity that producers are willing to offer at a given price and at a given point in time.

In the graph, market equilibrium is illustrated by the intersection of the supply and demand curves. The curves can intersect only at one point - the market equilibrium point. This point corresponds to the equilibrium price and the equilibrium volume of production.

The equilibrium price (P e) is the price at which there is neither a surplus nor a shortage of goods on the market.

Equilibrium volume (Q e) is the quantity of goods that is sold at the equilibrium price.

If the market is in equilibrium, then both sellers and buyers of products receive some benefit from the exchange.

Rice. 5. Consumer surplus and seller surplus

Buyer surplus arises due to the fact that they pay for all units of equilibrium quantity Qe at a single market equilibrium price Pe, and not at demand prices. Some buyers, having large incomes, would agree to buy at prices higher than the equilibrium price. They would save part of their income by purchasing the good at the equilibrium price.

0АЕQ e - the amount that consumers agree to pay for the equilibrium quantity of goods (the sum of demand prices).

0P e EQ e - actual expenses of consumers.

Buyers' surplus = 0AEQ e - 0P e EQ e, that is, P e AE is the amount that buyers win.

Seller surplus occurs when all units of equilibrium quantity Q e are sold at a single equilibrium market price, but not at supply prices.

0BEQ e - the amount for which producers are willing to offer the product (sum of offer prices).

0P e EQ e - actual revenue of sellers.

Sellers' surplus = 0BEQ e - 0P e EQ e, that is, P e BE is the amount that sellers win.

The total surplus of buyer and seller P e AE + P e BE constitutes their total gain from the exchange.

If the price on the market turns out to be higher than the equilibrium price (P 1), then a commodity surplus will arise. To realize this surplus, sellers will begin to reduce the price. As a result, the quantity demanded will increase and the quantity supplied will decrease until they become equal.

If the price on the market is lower than the equilibrium price (P 2), a commodity shortage will arise. In this case, buyers are ready to overpay for the necessary goods, i.e. the price begins to rise, and the market situation returns to the equilibrium point.

R

Surplus S

D deficiency

Rice. 6. Market equilibrium of supply and demand prices

This is how the market self-regulation mechanism works, which, through the reaction of prices to an emerging surplus or shortage of goods, changes the market behavior of buyers and sellers.

Changes in demand or supply under the influence of non-price factors are accompanied by shifts in curves. As a result, equilibrium will be achieved at new points of their intersection.

At the same time, a situation of fixed disequilibrium may arise in the market under the influence of so-called non-market factors (state, monopolies or trade unions).

The state can fix the price of some goods below the equilibrium price, thereby setting its upper limit. You cannot sell a product at a higher price.

A price “ceiling” is introduced to support low-income groups of the population or to combat inflation, but at the same time a persistent shortage of goods is established. In this case, the state must either limit demand (for example, introduce a system of distribution of goods through coupons, cards) or stimulate supply (for example, compensate manufacturers for part of the costs of producing goods).

The government can also fix the price of some goods above the equilibrium price, thereby setting its lower limit. Minimum prices are usually set to achieve acceptable income levels for some suppliers (for example, to ensure minimum wages or profitability of agricultural production). But this measure leads to the emergence of a sustainable surplus of products, so the state is obliged to either purchase these surpluses, or reduce the volume of supply of goods, or increase customer demand through a system of subsidies and subsidies.

Since the supply of goods is usually elastic only over time, the formation of market equilibrium depends on the time factor.

Depending on the time there are:

Instant balance. It is impossible to increase the supply of goods in a very short period of time, so equilibrium depends only on demand.

Short-term equilibrium. An enterprise, through the use of internal capacities, can increase the volume of supply.

Long-term equilibrium. Over time, other enterprises may join in the production of this product, or new technologies are introduced, which leads to a shift in the supply curve.