Market Equilibrium

Define market, price quantity equilibrium
Draw and explain market equilibrium graph
Calculate and draw supply, demand and equilibrium
Explain consumer and producer surplus
Explain and draw excess demand and excess supply
Draw and explain maximum and minimum price

Market Equilibrium (demand and supply)

Market equilibrium is the point where the quantity of a product demanded is equal to the quantity of a product supplied. This creates the market clearing price and quantity where there is no excess demand or excess supply.

Equilibrium price is the market-clearing price. It is set where D = S.

Equilibrium quantity: The level of output where quantity demanded equals the quantity supplied.

Watch additional videos here for even better understanding.

Activity: Using Your Whiteboard

Illustrate the effects which each of the following is most likely to have on the equilibrium position for Irish Crisps:

The lack of rainfall in 2018 creates a drought which reduces potato crops.
Vegan consumers stage protests against animal‐derived flavouring on crisps.
Crisp companies receive a subsidy from the government.
50% reduction in the price of drinks sols with crisps
Quota placed on the quantity of crisps entering Ireland
Government introduce a 15% levy (tax) on all income earned

Consumer and Producer Surplus

Consumer Surplus: is the difference between what a consumer actually pays for a good and the maximum s/he was willing to pay for the good rather than do without it. The utility gained from a good or service in excess of the amount paid for it.
Producer Surplus: is the difference between what a producer receives for a good and the minimum s/he was willing to accept for the good. The extra earnings obtained by the producer above the minimum required for them to supply the good or service.

Watch video here.

Excess Supply and Excess Demand

Activity: Using Your Whiteboard

Draw a demand and supply diagram, illustrate how a shortage of tickets for a major concert may arise. The concert venue has a maximum capacity of 30,000 people.
Using a supply and demand diagram, illustrate how a market would return to equilibrium following a surplus (excess surplus) in the market

Government Intervention: Impact on Market Equilibrium

Assessment Advice: Research Project

It is a good idea to start learning the skills needed to complete your Research Project. You do not have all the knowledge and conceptual understanding yet but you can learn to research and make links to other parts of the Leaving Cert course. It is important to use a reputable source when collecting data, therefore we will use the CSO ( Central Statistics Office).

Using your knowledge of Economics so far, research the following factors (using the CSO) and explain how they might impact the market equilibrium for rental accommodation:

Identify which determinants of demand and supply are impacted and support with labelled diagrams.

Extension: Using the infographic create a research question that you might like to investigate.

Extension Activities: Podcasts

Ep 34: Are House Prices Going To Crash? The Current State of the Market with Lorcan Sirr – The Crazy House Prices Podcast

This is one of my most sobering and important podcasts yet. If you’re trying to buy, rent, or just stay sane in the Irish housing market, you need to hear it. In this episode, I chat with the incredibly knowledgeable Dr. Lorcan Sirr about the current chaos that is the Irish housing market. We cover everything from skyrocketing house prices and the unrelenting demand on resources like water and electricity, to government policies that seem to make things trickier instead of easier. You can order my book: "How to buy a home in Ireland" here Sponsor: Beat The Bank Please support the Podcast and Instagram if you can over on my Patreon Make sure to follow me on Instagram and if you want to support the page and podcast, head over to my Patreon and get access to over 130 extra exclusive podcasts.

Test your knowledge of Market Equilibrium