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Equilibrium called on the market situation when sellers offer for sale exactly the same quantity of a good that buyers decide to purchase ( quantity demanded equals quantity supplied ).

Since sellers and buyers want to sell or buy different quantities of a good depending on its price, market equilibrium requires that a price be established at which the volumes of supply and demand coincide. In other words, the price equalizes the volumes of supply and demand.

The price that causes the volumes of supply and demand to coincide is called the equilibrium price, and the volumes of demand and supply at this price are called the equilibrium volumes of supply and demand.

In equilibrium conditions, the so-called market cleansing occurs: there will be no unsold good or unsatisfied demand (buyers who want to buy the good at the established price and who were unable to do so due to the lack of sellers) left on the market.

Thus, in order to find equilibrium in the market for a certain good, it is necessary to determine what price will cause in this market such a volume of supply that will correspond to the volume of demand: at this price, sellers will bring to the market exactly as much of the good they produce as buyers want to take away. This price is called the equilibrium price, and the volume of supply and demand corresponding to it is called the equilibrium volume of supply and demand.

The speed with which the market finds the equilibrium price depends on the "mobility" of its participants and on the ease of information transfer in the market (that is, on the perfection of the market).

Under the equilibrium of the industry market understand the optimization of the size of firms in a given industry while simultaneously reducing prices on the industry market to the level of minimum average production costs. Industry equilibrium is achieved when each firm reaches its equilibrium.

Demand curve industry shows how many goods all consumers will purchase. It decreases as consumers buy more goods at a lower price. The price here is determined by the interaction of all firms and consumers in the market, and not by the decision of an individual firm.

Industry Supply Curve shows the amount of output produced by an industry at each possible price. The output of an industry is the total supply of all individual firms.

Industry equilibrium occurs when conditions:

All industries maximize profits.

All factors of production become variable and the number of firms in the industry changes.

No firm has an incentive to enter or exit the industry since all firms earn zero economic profit. In other words, price must be equal to average total cost. Because entry and exit into an industry are relatively easy, positive or negative economic profits motivate firms to change. An industry cannot be in equilibrium if firms are in motion, either entering or leaving the industry. Long-run equilibrium requires that all changes in the industry be completed.

The price of a good is such that aggregate supply equals aggregate demand.

Thus, the equilibrium of an industry market is understood as optimizing the size of firms in a given industry while simultaneously reducing prices on the industry market to the level of minimum average production costs. Industry equilibrium occurs when the following conditions are met: all industries maximize profits; all factors of production become variable and the number of firms in the industry changes; no firm has an incentive to enter or exit the industry; the price of a good is such that aggregate supply equals aggregate demand.

Market equilibrium can only be considered relative to a fixed unit of time. At each subsequent point in time, market equilibrium can be established as a certain new value of the market equilibrium price and the number of sales of goods at this price, developing over the course of a month, season, year, series of years, etc. but market equilibrium is always a market state in which QD = QS (volume of demand = volume of supply). Any deviation from this state sets in motion forces that can return the market to a state of equilibrium: eliminate the shortage (QD > QS) or surplus (surplus) of goods on the market (QD< QS).

Thus, a surplus occurs if, at a certain price, the quantity supplied of a good exceeds the quantity demanded for it.

A product is in short supply if the quantity demanded for the product is greater than the quantity supplied.

Consumers do not always believe that existing prices are optimal. The fact is that the imperfection of the social structure of production on the surface appears as an imperfection of the price system. Public dissatisfaction with existing equilibrium prices forms fertile ground for government intervention in market pricing. In practice, this results in the establishment of maximum or minimum prices. If the maximum price set by the state (the “price ceiling”) is below the equilibrium level, then a deficit is formed, if the state sets the minimum price above the equilibrium level (the so-called subsidized price), then a surplus is formed. Fixing prices means turning off the market coordination mechanism. In conditions when the price is below the equilibrium level, the shortage does not weaken, but intensifies, and non-monetary costs are added to the consumer's monetary costs. The latter are associated with searching for goods, standing in queues, etc. - all of them are deadweight costs, which do not serve to expand the production of a scarce good. They settle in the distribution of scarce goods, and do not reach those who actually produce them. The price ceiling “cuts” the surplus of producers and thereby reduces the incentives for its production at those enterprises whose production costs for this product are minimal. Therefore, the shortage does not decrease. On the contrary, those who sell (or distribute) a scarce product are interested in preserving it, since it becomes a source of their income (since it increases the size of non-monetary costs). Therefore, they will in every possible way promote state regulation of prices under various “plausible” pretexts.

In cases where the price is above the equilibrium price, there is a need for additional measures to stimulate supply restrictions and increase demand in order to reduce the gap between the subsidized and equilibrium prices. In both cases, the market economy begins to function less efficiently than under conditions of perfect competition.

The balancing function is performed by the price, which stimulates supply growth when there is a shortage of goods and relieves the market of surpluses, restraining supply. According to Walras, in conditions of shortage the active side of the market is buyers, and in conditions of excess - sellers. According to Marshall's version, entrepreneurs are always the dominant force in shaping market conditions.

Any surplus of goods, i.e. commodity surplus pushes the price of goods down to the equilibrium point. Any commodity shortage, shortage of goods on the market will push the price of goods upward, to the point of equilibrium of supply and demand. Ultimately, an equilibrium PE price will be established at which QE goods will be sold on the market.

A market is a mechanism for interaction between buyers and sellers realizing their economic interests. The economic interest of buyers is to buy goods cheaper and satisfy their needs, so they offer prices for them, called demand prices. Under at the price of demand refers to the maximum maximum price at which the buyer still agrees to purchase goods. Sellers are interested in selling goods at a higher price and therefore present offer prices , representing the minimum prices at which they are still willing to sell their goods. The intersection of the economic interests of buyers and sellers, the interaction of supply and demand can be represented by combining the graph of their curves.

R 2 A B

P 1 E

R 3 C D

0 Q1 q

When the interests of producers and consumers coincide, market equilibrium arises, reflecting the equality of desires and capabilities of sellers and buyers. Point E, at which the supply and demand curves intersect and their interests coincide, is called the market equilibrium point, and the corresponding price P 1 is called the equilibrium price. Equilibrium price is the price at which the quantity of a good offered on the market is equal to the quantity of the good demanded.

When the market price is set above the equilibrium price (P 2 > P 1), then supply exceeds demand, since an increase in price, according to the law of supply, will stimulate an increase in production, and according to the law of demand, will reduce the desire to purchase goods. As a result, there is surplus of goods(from A to B), which will lead to overstocking of the market.

In this case, competition begins between sellers of this type of product, which will help reduce the price and bring it closer to the equilibrium point E.

If the market price is set below the equilibrium price (P 3<Р 1), то это в соответствии с законом спроса побуждает покупателя наращивать объем покупок, но по закону предложения приводит к снижению деловой активности производителя. В итоге спрос превысит предложение (от С до D), то есть возникнет shortage of goods. At the same time, competition between buyers intensifies, which leads to an increase in price, expansion of production and return of the price to its equilibrium value. The market price cannot rise above the equilibrium price, because the buyer simply does not have enough money to purchase the goods.

Thus, thanks to the manifestation of the laws of demand, supply and competition, market equilibrium is restored.

Topic 5. Basics of behavior of subjects of a market economy

Topic plan

1. The concept of a rational consumer. Total and marginal utility. Law of Diminishing Marginal Utility.

2. Organization (firm) as an economic entity.

3. Production function. Total, average and marginal product. Law of Diminishing Marginal Productivity.

4. Concept and classification of costs.

5. Income and profit of the company. Profit maximization rule.

Market equilibrium- this is when the plans of buyers (demand) and sellers (supply) coincide so that at a given price the quantity supplied is equal to the quantity demanded.

When the interests of producers and consumers coincide, market equilibrium arises. It can be defined as a situation where supply and demand coincide at a price acceptable to the consumer and producer. The economic meaning of this equilibrium is that it reflects the unity of sellers and buyers, the equality of their opportunities and desires.

Only at point E the price suits both the buyer and the seller at the same time. Indeed, it is not profitable for producers to further increase prices and increase supply, since the product or service will not find demand. Whoever breaks this rule will go bankrupt. The consumer should also count on lower prices, but this is contrary to the interests of producers.

If the market price is lower than the equilibrium price (P 1), then a shortage occurs, in which the quantity of demand exceeds the quantity of supply. When the market price is higher than the equilibrium price (P 2), a surplus of goods is formed, in which the volume of supply exceeds the quantity of demand.

Thus, the equilibrium price is the price at which the quantity of goods offered on the market is equal to the quantity of goods demanded. In other words, the equilibrium price is the price at which the quantity demanded by buyers coincides with the quantity supplied by sellers.

There are stable (stable) and unstable (unstable) market equilibrium. Stable occurs when the disturbed equilibrium state is restored again; unstable - when the disturbed market equilibrium remains so for a long period of time.

Equilibrium in the market is a situation when sellers offer for sale exactly the same amount of good that buyers decide to purchase (the volume of demand is equal to the volume of supply). Since sellers and buyers want to sell or buy different quantities of a good depending on its price, market equilibrium requires that a price be established at which the volumes of supply and demand coincide. In equilibrium conditions, the so-called market cleansing occurs: there will be no unsold good or unsatisfied demand (buyers who want to buy the good at the established price and who were unable to do so due to the lack of sellers) left on the market. Thus, in order to find equilibrium in the market for a certain good, it is necessary to determine what price will cause in this market such a volume of supply that will correspond to the volume of demand: at this price, sellers will bring to the market exactly as much of the good they produce as buyers want to take away. This price is called the equilibrium price, and the volume of supply and demand corresponding to it is called the equilibrium volume of supply and demand. The equilibrium of an industry market is understood as the optimization of the size of firms in a given industry while simultaneously reducing prices on the industry market to the level of minimum average production costs. Industry equilibrium is achieved when each firm reaches its equilibrium. Deficit is an excess of demand over supply. A shortage indicates a mismatch between supply and demand and the absence of a balancing price.

In most markets, the first sign of a shortage is a sharp decrease in inventory. When inventory levels decrease and fall below planned levels, sellers may try to replenish inventory by increasing orders to the manufacturer. Some sellers will capitalize on increased demand by increasing the price because they know buyers are willing to pay more. But whatever the details, the result will be a movement up the supply curve as the price and quantity of the good rise. Since shortages put downward pressure on prices, buyers will also be forced to change their plans. As they move left and up the demand curve, they will cut back on their consumption. As a result of changes in the plans of buyers and sellers, the market comes to equilibrium. Factors of shortage: 1. Unbalanced price (demand outstrips supply). Typically, shortages indicate low supply caused by low prices.2. Errors in purchasing planning and sales analysis.3. Changes in the current market situation (emergence of a new fashion, trend, law)4. Active advertising or PR campaign.5. Logistical problems. The item may be correctly ordered. It can be priced correctly. It is advertised correctly. But if for some reason it is not delivered to the warehouse or is late to the store, there is a high probability of being in a state of shortage.6. The goods are ordered without taking into account complexity.7. Social and environmental factors. Weather, ecology, epidemics can provoke unexpectedly high demand for a product. Surplus—When there is a surplus of a product, sellers cannot sell everything they hoped to sell at a given price. As a result, their inventories increase and soon exceed the level that was planned in case of normal changes in demand. Causes: 1. Unbalanced price (the price is too high for a given market or for a given type of product). No one will overpay for a product or service if the price on the market has already been established or exceeds reasonable limits.2. The expiration or sale date has expired. The store sells food products, including perishable goods (for example, fish), or has in its assortment goods with a limited shelf life (household chemicals, cosmetics). Failure to sell it within the required time period leads to the formation of substandard goods. It is practically not subject to further processing and sale. 3. Errors in sales forecasts. 4. Excessive purchasing 5. Commodity cannibalism (the appearance of one product displaces sales of another). 6. Changes in consumer fashion or taste. 7. Legislative acts (prohibition on the sale of products).8. Incompleteness of goods, erroneous proportions when ordering complete goods. 9. Reservations in anticipation of increased demand or prices (in wholesale companies).

As you know, the market, in the economic sense of the word, works according to certain rules and laws that regulate the price, shortage of goods or their surplus. These concepts are key and influence all other processes. What is a commodity deficit and surplus, as well as the mechanisms of their occurrence and elimination are discussed below.

Basic Concepts

The ideal situation in the market is the same amount of goods offered for sale and buyers ready to purchase it at a set price. This correspondence between supply and demand is called the price that is established under such conditions, also called equilibrium. However, such a situation can only occur at a single point in time, but cannot persist for a long period. Constant changes in supply and demand due to many variable factors cause either an increase in demand or supply. This is how phenomena called commodity shortages and commodity surpluses arise. The first concept defines the excess of demand over supply, and the second - exactly the opposite.

Emergence and elimination of market-wide deficiencies

The main reason why a commodity shortage occurs at a certain point in time is a sharp increase in demand, to which supply does not have time to respond. However, if the state or insurmountable specific factors (wars, natural disasters, etc.) do not interfere in the process, the market is able to independently regulate this process. It looks like this:

1. Demand increases and commodity shortages arise.
2. The equilibrium price rises, which pushes the producer to increase production volumes.
3. The quantity of goods on the market is increasing.
4. Commodity appears
5. The equilibrium price falls, which initiates a reduction in production volumes.
6. The state of supply and demand is stabilizing.

Such processes occur continuously in the market and are part of the country’s economic system. However, if there is a deviation from the scheme outlined above, then regulation does not occur; the consequences can be very complex: constant and one group and an excess of another, growing discontent among the population, the emergence of shadow production, supply and sales schemes, etc.

An example from the recent past

Commodity shortages can also arise due to excessive interference in market processes, which often occurs in planned or command economies. A striking example of this is the shortage of food and food products in the 80s in the USSR. An overly extensive, busy and completely inflexible production planning and purchasing system, along with the growing welfare of the population and the availability of free funds, led to the fact that store shelves were empty, and huge queues lined up for any product that was available. Manufacturers did not have time to satisfy the needs of the consumer, since they did not have the ability to quickly respond to demand - all processes were strictly subordinated to bureaucratic procedures that took too long and could not meet market requirements. Thus, for a fairly long period of time, a constant commodity deficit was established throughout the country’s market. It is difficult for a command economy to cope with this phenomenon due to the factors listed above, so the problem can be solved either by completely restructuring the system or by changing it.

Phenomenon in microeconomics

Commodity shortages can arise not only throughout the economy of the entire country, but also at individual enterprises. It can also be either temporary or permanent, and is characterized by a lack of finished products to cover the demand for it. But unlike macroeconomic processes in an enterprise, the balance of inventories and demand, on the contrary, depends on the quality of planning. True, the speed of production’s response to market changes is also important. At the microeconomic level, a commodity shortage has a number of consequences: loss of profit, the likelihood of losing both regular and potential customers, and deterioration of reputation.

Causes and consequences of surplus

An excess of supply of any product or an entire group over demand causes a surplus. This phenomenon is also called surplus. The emergence of surplus in a market economy is a natural process - a consequence of imbalance - and is independently regulated in the following way:

1. Decreased demand or excess supply.
2. The emergence of a surplus.
3. Decrease in market price.
4. Decrease in production and supply.
5. Increase in market price.
6. Stabilization of supply and demand.

In a planned economy, commodity surpluses are a consequence of incorrect forecasting. Since such a system is unable to self-regulate due to excessive intervention, the surplus can last for quite a long time without the possibility of its regulation.

Enterprise-wide surplus

There is also a surplus within a single enterprise. Commodity shortages and surpluses in microeconomics are regulated not by the market, but “manually”, i.e. primarily through planning and forecasting. If errors are made in these processes, then products not sold on time create surpluses, which can lead to monetary losses. This is especially acute for grocery enterprises and others whose sales period for goods is short. Also, a surplus can cause significant harm to the financial stability of industries whose products are seasonally dependent.

It is impossible to solve the problem of supply and demand balance once and for all, either on a national scale or within an individual enterprise. In addition, such a decision is not required, since deficits and surpluses are important processes that, among other things, stimulate the development of the economy and production, as well as interstate trade and relations in the context of exports and imports.

Demand - the desire and ability of consumers to purchase certain goods in given economic conditions. Availability of demand depends on the needs of buyers.

Magnitude (volume) of demand- some quantity of goods that a consumer, group of consumers or population buys according to a definition. price per unit of time under given conditions.

IN market conditions, demand acts as effective demand , which is determined by the amount of money that the buyer is willing to spend on the purchase of goods.

The amount of demand for a product depends on various factors, primarily on the price of the product: Qdx = f(Px), Where Qdx – volume of demand for a product X; Rx– the demand price for a product X.

Ask price – the maximum price that a buyer agrees to offer for a unit of a product at a certain point in time. The higher the price of a product, the less opportunity and desire of the consumer to buy this product (unless, of course, the latter can be replaced with some other one). This functional dependence constitutes the content law of demand : other things being equal, the higher the price of a product, the lower the quantity demanded for it, and vice versa, the lower the price, the greater the quantity demanded.

When demand decreases, on the graph the demand curve shifts to the left and down (from position D 1 to position D 2), not necessarily parallel to the original position.

A decrease in demand means that for the same price (for example, P3) the consumer buys a smaller quantity of the product - not Q2, aQ1 (shift the curve to the left), or for the same quantity of goods (for example, Q2) he is ready to pay a lower price - not P3, but P1(curve shift down).

Offer - these are specific goods and services that producers are willing and able to produce and sell under given economic conditions. This dependence is reflected in law of supply:When the price rises, the quantity supplied increases; when the price decreases, the quantity supplied decreases.

Let's combine market curves on one graph. demand and markets. offers. At the point E they will intersect, while the quantities of supply and demand will be equal and will reach the equilibrium volume of production Q e at equilibrium price R e. This point of intersection of the supply and demand curves called the point of static market equilibrium.

Supply and demand in the market constantly fluctuate, and the position of the equilibrium point changes accordingly. In equilibrium, neither buyers nor sellers have incentives to change their behavior, i.e. changes in demand or supply. Indeed, all consumers willing to pay a price per unit of goods R e or higher, they can buy this product, for other buyers it will remain too expensive.

At the same time, sellers who are able to supply goods to the market at a price R e or cheaper, will be able to find their buyer, and other, less efficient producers will be forced to leave the market.

The question is how market equilibrium is established , complicated. Let's say manufacturers want to set a price for their product R 1. At this price they will be able to supply the market with quantities of goods Q 2(dot 2). However, at such a high price, buyers will only be willing and able to buy quantity Q 1 good (according to point 1 on the demand curve). The market will appear surplus goods V quantity Q2 – Q1.

Competition between sellers will force them to lower the price in order to sell their product. The market price will begin to fall, and those sellers who will be unable to reduce the price to the value R e, will leave the market. If the market price falls to P2, then at such a low price consumers will demand in quantity Q2(dot 4). But manufacturers will be able to offer only a small amount of product Q1 (point 3), and there will be a shortage of goods, as a result of competition between buyers, prices will rise to the level R e.

Commodity surpluses and shortages

Planning purchases based on inaccurate data can lead to incorrect determination of the required inventory of goods. Managing surplus goods of high consumer demand is not particularly difficult and can be solved by reducing purchase volumes and thus bringing inventory to normal levels. Surplus goods that are not in consumer demand increase the company’s storage costs and require the development of special measures for their sale.

Irregularity in the supply of goods leads to a shortage of inventory in the warehouse and creates significant difficulties in meeting the needs of customers. If there is a shortage of goods, the wholesale enterprise either refuses to serve consumers or finds ways to meet their needs by making special purchases that require additional capital investments.

Irregular deliveries of goods require the creation of reserve stocks sufficient to meet the needs of recipients during the period between deliveries.