Excess demand and excess supplySyllabus: Analyse, using diagrams and with reference to excess demand or excess supply, how changes in the determinants of demand and/or supply result in a new market equilibrium.
If you would prefer to view this interaction in a new web window, then please follow the link below:
Changes in demand and supplySo with all this in mind you can work through the examples on the next pages. However I would say what is missing is the amount of excess demand and excess supply can you say where this is in the diagrams? Remember to go through the ESEPME process carefully step by step and it should make logical sense to you as a cause and effect process.
Having worked through this unit you should be able to:
1. Define a market
2. Show how it responds to changes in supply and demand ESEPME
3. Demonstrate that movements along a demand curve come as a result of a shift in the supply curve, and movements along a supply curve from a shift of the demand curve.