EQUILIBRIUM OF

DEMAND AND SUPPLY:

Presented By:
Awais Ahmed

Ahmed Hassan

Hassan Jan

Kinza Amin

Presented to:

Ma'am Najaf Aslam

 Equilibrium

 The state in which market

supply and demand balance
each other

•Result prices become stable

•No net tendency to change.

• Absence of external influences

values of economic variables will not

change.
 Market Equilibrium

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
produced by sellers. 
• equilibrium price when the
supply of goods matches
demand
 :Characteristics of Market Equilibrium

• The behavior of agents is consistent.

• There are no incentives for agents to change

behavior

• A dynamic process governs equilibrium

outcome
 Law of demand and supply

• The law of demand says that at higher

prices, buyers will demand less of an
economic good

The law of supply says that at higher

prices, sellers will supply more of an
economic good.

• These two laws interact to determine the

actual market prices and volume of
goods that are traded on a market.
 Equilibrium of supply and demand

1. The Point where the demand curve intersect the

supply curve

2. Point at which the market demand equal to

market supply

3. External or internal factor remain constant

Graphically Representation
 When market is not in equilibrium

The quantity demanded is not equal to the quantity

supplied

 If price is less than equilibrium level

.  there will be a shortage.

 If the market price is too high (i.e. higher than the
equilibrium price)

Many sellers want to sell, but only few buyers are

interested in buying..
THANK
YOU