What is a surplus, and how do suppliers typically react to a surplus in the market?

A surplus is when the quantity supplied exceeds the quantity demanded. Suppliers typically react by lowering prices to attract more consumers and reduce the excess inventory. They may also decrease production.

Describe the process by which the market moves from a state of shortage to equilibrium.

In a shortage, consumers bid up prices, encouraging suppliers to increase production. As prices rise, demand decreases, and the market moves towards a point where quantity supplied equals quantity demanded, reaching equilibrium.

Describe the process by which the market moves from a state of surplus to equilibrium.

In a surplus, suppliers lower prices to attract consumers, which increases demand. As prices fall, suppliers reduce production, and the market moves towards a point where quantity supplied equals quantity demanded, reaching equilibrium.

Finding Price Equilibrium Lesson Plan for 11th Grade

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Objective

I can explain how supply and demand interact to determine price equilibrium.

Part 1 of 3

Warm-up video

Khan Academy · 10:17Vetted channel

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Part 2 of 3

Practice

7 questions

Define 'quantity demanded' as discussed in the video.

Explain what a shortage indicates to suppliers in the market.

Part 3 of 3

Exit ticket

Quick comprehension check

“Explain how a surplus of apples in the market will cause the price to adjust towards equilibrium.”

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Finding Price Equilibrium