Supply Demand and Equilibrium
In a simple market model, equilibrium occurs where quantity supplied equals quantity demanded.
About 20 minutes, plus any extended practice
Supplied materials
- Paper and pencil; drawing or spoken answers are welcome.
- Topic notes: Equilibrium: quantity supplied equals quantity demanded at the stated price. Shortage: quantity demanded exceeds quantity supplied at the stated price. Surplus: quantity supplied exceeds quantity demanded at the stated price. Schedule shift: a change in the relationship at given prices.
- Original exercise cards: Fictional price: supplied 8, demanded 8. / Fictional price: supplied 6, demanded 10. / Fictional price: supplied 11, demanded 7. / Fictional buyers demand more at every listed price. / Fictional price: supplied 4, demanded 9. / Fictional price: supplied 14, demanded 8. / Fictional sellers offer less at every listed price. / Fictional price: supplied 12, demanded 12.
Learn the idea
In a simple market model, equilibrium occurs where quantity supplied equals quantity demanded. A shortage means quantity demanded exceeds quantity supplied at the stated price; a surplus means the reverse. A shift changes a schedule, while movement along a schedule responds to its price. These are conditional models, not trading predictions.
Equilibrium: quantity supplied equals quantity demanded at the stated price. Shortage: quantity demanded exceeds quantity supplied at the stated price. Surplus: quantity supplied exceeds quantity demanded at the stated price. Schedule shift: a change in the relationship at given prices.
Identify the scarce resource, production step or changing incentive before choosing the economic explanation. These exercise cards are original classroom prompts, not quotations or archival documents. The historical notes describe actual topics; invented situations are explicitly called fictional. A correct match needs a reason from the notes, not just a guessed label.
- Read the actual topic notes and identify the facts or rule needed for this question.
- Work through the solved analysis, distinguishing observations, interpretations and evidence limits.
- Solve the new main case: show the relevant sequence, calculation, mechanism, institutional relationship or source comparison before choosing.
- Complete the distinct practice cases and state which further evidence would be needed for a broader claim.
See the method in action
Worked analysis: Fictional price P has supply 6 and demand 10; price Q has supply 11 and demand 7. First, separate the supplied facts and the question each can answer. Then compare the relevant rule, relationship or scope. P has a shortage of 4 units and Q a surplus of 4. Equal gap size does not make the direction identical. Neither price is an equilibrium in the supplied model. Subtract and name the direction; equilibrium requires equality.
Check your reasoning
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Helpful tips
- Subtract and name the direction; equilibrium requires equality.
- Keep the four distinctions separate: Equilibrium, Shortage, Surplus, Schedule shift. Use a complete reason rather than copying only a title.
See the answer and explanation
A shortage of 5 units at R.
Demand exceeds supply, so the gap is 13−8=5 units and its direction is shortage. Equilibrium requires equal quantities, not merely positive ones.
Take it further
Write a short response to a new classroom draft claiming that the worked analysis proves a universal result. Use two distinct supplied facts from this lesson, give a supported conclusion, and identify the extra evidence needed for the draft’s broader claim. Expected reasoning: P has a shortage of 4 units and Q a surplus of 4. Equal gap size does not make the direction identical. Neither price is an equilibrium in the supplied model. A valid response names the scope and does not invent a quotation, date, measure or achieved result.
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More practice: try new cases
Choose an answer for each problem. Explain your method on paper, then use the feedback to decide what to revisit.
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Check the subject sources
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