Learning objectives
Identify equilibrium price and quantity where quantity demanded equals quantity supplied, and explain how a shortage or surplus pushes price back toward equilibrium
Define consumer surplus, producer surplus and total surplus, identify them on a diagram and calculate them as areas
Explain why the competitive equilibrium is allocatively efficient: marginal benefit equals marginal cost and total surplus is maximized
Analyze the effect of a single shift in demand or supply on equilibrium price and quantity
Analyze simultaneous shifts in demand and supply and determine which of price and quantity is indeterminate without knowing the relative sizes of the shifts
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