Definition§
Equilibrium Quantity refers to the quantity of a good that will be produced and sold in the market when the good’s supply equals its demand. At this point, the market is said to be in equilibrium, which is characterized by the balance between the quantity supplied and the quantity demanded.
Examples§
- Coffee Market: In the market for coffee beans, suppose the equilibrium price is $5 per pound. The equilibrium quantity would be the number of pounds of coffee beans that consumers are willing to buy and sellers are willing to sell at this price.
- Automobile Industry: If electric cars reach an equilibrium price of $30,000, the equilibrium quantity would be the number of electric cars purchased by consumers willing to spend up to $30,000 and produced by suppliers at a selling price of $30,000.
- Housing Market: Considering the real estate market in a metropolitan area, the equilibrium quantity would be the number of houses bought and sold when the supply of houses equals the demand at the equilibrium price.
Frequently Asked Questions§
Q: What happens when there is a change in demand or supply? A: A change in demand or supply affects the equilibrium price and quantity. If demand increases, the equilibrium price and quantity both rise. Conversely, if supply increases, the equilibrium price falls while the quantity rises.
Q: Can the equilibrium quantity exist if the market is not in equilibrium? A: No, equilibrium quantity specifically refers to the amount produced and sold when the market is in equilibrium. If the market is not in equilibrium, the quantity supplied does not equal the quantity demanded.
Q: How is equilibrium quantity determined? A: Equilibrium quantity is determined at the intersection of the supply and demand curves. The point where these curves intersect represents the equilibrium price and equilibrium quantity.
Related Terms§
- Equilibrium Price: The price at which the quantity of a good equals the quantity demanded.
- Economic Equilibrium: A state where market supply and demand balance each other, resulting in stable prices.
- Law of Demand: A principle stating that other factors being constant, an increase in a good’s price will decrease the quantity demanded.
- Law of Supply: A fundamental principle stating that an increase in price results in an increase in the quantity supplied.
Online Resources§
Suggested Books for Further Studies§
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“Basics of Environmental Economics” by Matthew Kahn: A comprehensive guide that explores various economic principles including market equilibrium.
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“Principles of Economics” by N. Gregory Mankiw: This essential textbook covers a range of fundamental economic topics including supply, demand, and equilibrium.
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“Microeconomics” by Robert S. Pindyck and Daniel L. Rubinfeld: Provides in-depth insights into microeconomic theories, including market equilibrium analysis.
Fundamentals of Equilibrium Quantity: Economics Basics Quiz§
Thank you for exploring the concept of equilibrium quantity with us and striving to deepen your economics knowledge through our quizzes!
