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Describe the role of buyers and sellers in determining the equilibrium price.
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
Interactive Learning Activities
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.
Here is a
to a Youtube tutorial on Equilibrium Price.
For more refer to Standards
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
Do Boycotts Work?
a podcast from Freakonomics Radio
Current List of Consumer Boycotts
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
Click here to play a fun supply and demand game from
for a description of a classroom game that teaches students about supply, demand and the equilibrium price.
More activities, graphs, and information on
NOVA Lesson Plan:
Mind Over Money
explores the new science of behavioral economics.
Check out this
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
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.
This lesson from the
Economic Education Web
at the University of Nebraska, is based on Holt's article.
1. Equilibrium Price. Accessed April 16th, 2008.
2. Supply and Demand. Accessed April 17th, 2008.
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