Chapter 7: Supply, Demand, and Equilibrium

Kevin C. Klein

Supply, demand, and equilibrium The underlying foundation for much of the content for all other chapters in this reference manual is the economic concepts of supply and demand. In reading this chapter, you will begin to understand the basic concepts of supply and demand and how changes in the actions of buyers and sellers influence market prices. Markets are defined as any place where products or resources are exchanged. Every market has two sides: buyers and sellers. Buyers, or demanders, are those who purchase the product or resources. Sellers, or suppliers, are those who provide the products or resources for sale in the market. What motivates these market participants? Although many factors motivate buyers' and sellers' behavior, economists assume that the primary motivating factor is self-interest. Buyers are assumed to be motivated by their desire to improve overall satisfaction, or utility, in life. Sellers are assumed to be motivated Let ...

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