Equilibrium Cheat Sheet by NatalieMoore

Economic equili­brium is a state where economic forces such as supply and demand are balanced and in the absence of external influences the (equil­ibrium) values of economic variables will not change.

Surplus. Higher supply than demand.

Equili­brium qty rises

Shortage. Higher demand than supply.

Equili­brium qty falls

Maybe because incomes have increased or population has grown.

Compet­itive equili­brium

In a compet­­itive equili­­brium, supply equals demand.

Market equili­brium

A condition where a market price is establ­­ished through compet­­ition such that the amount of goods or services sought by buyers is equal to the amount of goods or services offered by sellers.

Surplus

Qty supplied > qty demanded. Price is above equili­brium.

Three basic properties of equili­brium in general proposed by Huw Dixon:

P2

No agent has an incentive to change its behavior

Comple­mentary goods: price change of one effects quantity demanded of the other.

Price decreasing on compli­mentary

See shortage