ECO511 | Economics Equilibrium | Economics

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Economic equilibrium refers to that order in which the demand for a particular product in the market is meeting to the supply of the same product. The equilibrium point of any product helps the organisation to understand the demand value of the product and according to which the organisation can make its strategies on advertisement and production of the product. Demand curve and supply curve tells us about the change in the decision of buyers and sellers when the price of the product changes. We can also say that equilibrium point is when the quantity demanded is equal to the quantity supplied.


Macroeconomic Equilibrium:


Macroeconomic equilibrium is that state where aggregate supply is equal to aggregate demand. Where aggregate means the total amount of demand and supply of the product. If there is even a small amount of change in the supply or the demand of the product in the case of Macroeconomics Equilibrium, That will impact a series of changes in the price of the product and that will bring unemployment and the chances of inflation in the country. If the supply of the product is more than the demand for the product the organisation have to reduce the price of the product. The reduced price will bring a huge amount of loss for the organisation, and if the demand for the product is increasing compared to the supply of the product, the company will increase the price of the product which can bring the situation of inflation.

Effects of change in supply and demand on the economy:


The Economy of a country can be upside down if there are changes in the demand and supply of products. The minor change in the demand or supply of the product can take away the jobs of people and make them unemployed. On the other hand, if the demand for products is increasing and the organisations are unable to fulfil the demand by managing the supply of the product, That will make the case where the price of the product will be touching the sky and county will be facing inflation.

Static Equilibrium:


The static equilibrium is that point of time where every industry, factory or individual firm wants to be. It can be in three states, Which are Microstatic, Micro static and comparative Static.

Microstatic:
It refers to the equation where demand is equal to price and supply is equal to price. So According to this equation, the demand will be equally proportional to supply.
                    D=P ------- (i)
                    S=P--------(ii)
Here D is Demand, P is Price and S is supply.
According to this equation (i) and (ii)
                    D= S-------(iii)

Market Price:


Market Price is also known as equilibrium price, It refers to that state where the volume of goods and services supplied are same to the volume of goods and services demanded. One can also say that the market price is the point where the demand curve and the supply curve meets.
The company which is having the equilibrium point for the product it is producing will not be wasting any product, All the product which is produced will be supplied to its customers.

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