<Standard E.2.1 ................................................................................................................................................Standard E.2.3>

Describe the role of buyers and sellers in determining the equilibrium price.

external image Basic_supply_demand.png

Focus Question: How do buyers and sellers determine the equilibrium price?


  • The image to the right shows a supply and demand curve. The point at which the red and blue lines cross is the equilibrium price.

Topics on the Page

  • Equilibrium Price
    • Consumer Boycotts
  • Interactive Learning Activities

Equilibrium Price


Equilibrium price: when the amount of supply equals the amount in demand.
  • Essentially this means that supply and demand helps determine the equilibrium price.
  • When supply exceeds demand, sellers have to lower their prices in an attempt to get buyers to purchase.
  • When demand is greater than the supply, the buyers make the price go up because they are competing to buy the same goods.
  • Factors such as the cost of production, consumption habits, and restrictive practices and monopolies help influence the equilibrium price.
    • For example, if the buyer's consumption habit changes and they begin buying more of a certain product, there will be more of a demand for it.
  • To maintain an equilibrium price, the supply would have to rise as well. If the supply did not rise, then sellers would raise the price of their goods, throwing off the equilibrium price.

Multimedia.pngHere is a link to a Youtube tutorial on Equilibrium Price.

For more refer to Standards E.2.7 and E.2.8

Consumer Boycotts

external image Bill_King_and_Patricia_Stephens-Boycott_and_picketing_of_downtown_stores_Tallahassee%2C_Florida.jpg
Buycotting is a form of consumer power where people engage in an active campaign to buy the products or services of a particular company or country. It is an attempt to let political, moral, or ethical considerations factor into demand for a product.

  • Image to the right shows boycotting and picketing of downtown stories in Tallahassee, Florida, December 1960

podcast icon.pngDo Boycotts Work? a podcast from Freakonomics Radio

Current List of Consumer Boycotts (May 2016)

The 1965-1970 Delano Grape Strike and Boycott from the UFW union

Delano Grape Strike and Boycott 1965 from the National Archives

Interactive Learning Activities and Lesson Plans


game_icon.svg.pngClick here to play a fun supply and demand game from Schmoop.

  • Click here for a description of a classroom game that teaches students about supply, demand and the equilibrium price.
Multimedia.pngMore activities, graphs, and information on equilibrium price from Schmoop.

lesson_plan_icon.jpg
  • NOVA Lesson Plan: Mind Over Money explores the new science of behavioral economics.

  • Check out this lesson plan provided by New York public television.

  • Pit Market Lesson Plans: Trading in a Pit Market Charles A. Holt gives a good explanation of how to set up a market in your classroom, from Journal of Economic Perspectives, 10 (1), Winter 1996, 193-203. This page also has links to a number of other classroom activity papers by Holt.
ecedweb.unomaha.edu/entrepreneur/lesson5.pdf This lesson from the Economic Education Web at the University of Nebraska, is based on Holt's article.

Sources:
1. Equilibrium Price. Accessed April 16th, 2008. http://encarta.msn.com/encnet/refpages/search.aspx?q=equilibrium+price
2. Supply and Demand. Accessed April 17th, 2008. http://encarta.msn.com/encyclopedia_761551825/Supply_and_Demand.html