You've mastered demand curves, supply curves, and elasticity! Now let's see the magic happen when supply and demand curves meet on the same graph.

This intersection point is called market equilibrium - where the market naturally settles.

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What term describes the point where buyers and sellers meet in the market?

Market equilibrium occurs where supply and demand curves intersect. At this point, quantity demanded equals quantity supplied - no shortages, no surpluses.

The price where this happens is called the equilibrium price. The quantity is called equilibrium quantity.

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If demand is 100 units and supply is 80 units, is this equilibrium?

Let's find equilibrium with real data. Coffee demand at $3: 200 cups. Coffee supply at $3: 200 cups. Perfect match!

At $4: demand is 150 cups, supply is 250 cups. At $2: demand is 300 cups, supply is 100 cups.

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Which price creates equilibrium: $2, $3, or $4?

When markets aren't at equilibrium, they naturally move toward it. If supply exceeds demand, prices fall. If demand exceeds supply, prices rise.

Think of it like water finding its level - markets find their equilibrium.

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What happens to price when there's a shortage?

Now for the exciting part: comparative statics! This means predicting how equilibrium changes when something shifts supply or demand curves.

Remember those curve shifters from previous sessions? They create new equilibrium points.

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If coffee becomes trendy, which way does the demand curve shift?

Let's trace through a demand shift. Coffee becomes trendy - demand shifts right. At the old equilibrium price, there's now excess demand.