Market Equilibrium: Navigating Shifts in Supply and Demand

Economics Grades High School 6:16 Video
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Lesson Description

Explore how simultaneous changes in supply and demand affect equilibrium price and quantity in a market. Learn to analyze market dynamics using graphical representations.

Video Resource

Changes in equilibrium price and quantity when supply and demand change | Khan Academy

Khan Academy

Duration: 6:16
Watch on YouTube

Key Concepts

  • Supply and Demand
  • Equilibrium Price
  • Equilibrium Quantity
  • Market Shifts

Learning Objectives

  • Students will be able to illustrate and explain the impact of changes in supply and demand on equilibrium price and quantity.
  • Students will be able to predict how various events (e.g., new producers entering the market, health reports) will affect supply and demand curves and the resulting equilibrium.

Educator Instructions

  • Introduction (5 mins)
    Begin by reviewing the basic concepts of supply and demand curves and how they interact to determine equilibrium price and quantity. Briefly discuss factors that can shift these curves independently.
  • Video Viewing (10 mins)
    Play the Khan Academy video "Changes in equilibrium price and quantity when supply and demand change." Instruct students to take notes on the examples provided in the video.
  • Guided Practice (15 mins)
    Work through additional examples as a class, drawing supply and demand curves on the board. For example, ask: "What happens to the ice cream market if the price of sugar increases while a new health study praises the benefits of ice cream?" Guide students to think about how each factor independently shifts the curves, and then how to determine the new equilibrium.
  • Independent Practice (15 mins)
    Provide students with scenarios (e.g., a new technology lowers the cost of producing a good, consumer income decreases). Have them draw the supply and demand curves, illustrate the shifts, and determine the new equilibrium price and quantity. Students can work individually or in pairs.

Interactive Exercises

  • Supply and Demand Simulation
    Use an online simulation (if available) where students can manipulate supply and demand curves and observe the resulting changes in equilibrium. This provides a visual and interactive way to reinforce the concepts.

Discussion Questions

  • How does the market react when both supply and demand increase?
  • What real-world events could cause both the supply and demand for a product to decrease simultaneously?

Skills Developed

  • Analytical Thinking
  • Graphical Interpretation
  • Economic Reasoning

Multiple Choice Questions

Question 1:

If both supply and demand increase, what will happen to the equilibrium quantity?

Correct Answer: Increase

Question 2:

What happens to the equilibrium price if supply increases and demand decreases?

Correct Answer: Decreases

Question 3:

A new ice cream producer enters the market. This will cause the supply curve to:

Correct Answer: Shift right

Question 4:

A report is released stating ice cream is unhealthy. This will cause the demand curve to:

Correct Answer: Shift left

Question 5:

If the supply curve shifts to the left, this indicates a(n):

Correct Answer: Decrease in supply

Question 6:

What does the intersection of the supply and demand curves represent?

Correct Answer: Equilibrium

Question 7:

If demand decreases while supply remains constant, the equilibrium price will:

Correct Answer: Decrease

Question 8:

Which of the following could cause a decrease in supply?

Correct Answer: A shortage of raw materials

Question 9:

When demand increases, what happens to the equilibrium price?

Correct Answer: It increases

Question 10:

Which of the following would cause an increase in demand for ice cream?

Correct Answer: A successful advertising campaign

Fill in the Blank Questions

Question 1:

The point where the supply and demand curves intersect is called the ________.

Correct Answer: equilibrium

Question 2:

A shift to the right in the supply curve indicates a(n) ________ in supply.

Correct Answer: increase

Question 3:

If demand decreases, the equilibrium price will typically ________.

Correct Answer: decrease

Question 4:

If supply decreases and demand is constant, the equilibrium quantity will ________.

Correct Answer: decrease

Question 5:

When there is more of a product supplied than demanded, there is a ________.

Correct Answer: surplus

Question 6:

The vertical axis on a supply and demand graph represents ________.

Correct Answer: price

Question 7:

A shift to the left in the demand curve indicates a(n) ________ in demand.

Correct Answer: decrease

Question 8:

If both supply and demand increase, the equilibrium ________ will increase.

Correct Answer: quantity

Question 9:

When there is less of a product supplied than demanded, there is a ________.

Correct Answer: shortage

Question 10:

The horizontal axis on a supply and demand graph represents ________.

Correct Answer: quantity

Educational Standards

SOC.9-12.E.3.1:Analyze how price and non-price factors affect the demand and supply of goods and services available in the marketplace. SOC.9-12.E.10.3:Explain how changes in supply and demand cause prices to change and in turn, cause buyers and sellers to change, including changes in price of productive resources and technologies used to make the product, profit opportunities available to producers for selling other products, number of sellers in a market, consumer incomes, consumer options, and the number of consumers in a market.

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