Saturday, July 28, 2018

EQUILIBRIUM

                                       EQUILIBRIUM

LET US SAY THERE IS A SITUATION IN THE MARKET WHERE THERE IS A HUGE DEMAND FOR MOTOROLA MOBILE PHONES IN THE MARKET AND THE COMPANY ANALYZES THE SITUATION AND PRODUCES A QUANTITY THAT HELPS THEM TO FULFILL THE MARKET DEMAND. SO IF THE COMPANY PLOTS THE WHOLE SCENARIO IN A GRAPH THERE IS A SITUATION WHERE THE DEMAND CURVE INTERSECTS WITH THE SUPPLY CURVE. THIS POINT OF INTERSECTION IS CALLED EQUILIBRIUM.
WE CAN ALSO SAY EQUILIBRIUM IS A SITUATION IN WHICH THE QUANTITY SUPPLIED MEETS THE QUANTITY DEMANDED.
IF THE SUPPLY CURVE EXCEEDS THE DEMAND CURVE AFTER EQUILIBRIUM POSITION WE CAN SAY THAT THERE IS A SURPLUS OF PRODUCT IN THE MARKET AND VICE VERSA IF THE SUPPLY CURVE FALLS SHORTER THAN THE DEMAND CURVE WE CAN SAY THAT THERE IS A SHORTAGE OF THE PRODUCT IN THE MARKET.



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