How Markets (Prices) Coordinate Economics Activity (The Positives of Markets)

Prices Are Signals that Coordinate Economic Activity: In markets, price flexibility is the key to resolving any shortages or surpluses. If prices are allowed to adjust to changes in either market supply or market demand there will be no long-term shortages or surpluses. The price adjustment will ensure Qd = Qs for a product in the long-term. Price flexibility is the key to allowing markets to clear - to find their equilibrium. If left unregulated, prices always move to relieve shortages or surpluses.
When presented a problem in economics we always begin at some “original” equilibrium (one word). When we are at the equilibrium, there are no internal forces to move us away from it. It would take a change in an external (exogenous) event (variable) to move us away from an equilibrium point - these external events are often called “shocks”.
When starting a problem, we should assume the “determinants” of demand (income, taste, price of related goods, etc.) and the “determinants” of supply (cost of inputs, state of production technology, etc.) are specific values. The values of the determinants of demand give us the original Demand curve (D0) and the values of the determinants of Supply give us the original Supply curve (S0).
This video is made for 1st year college students or AP/IB Economics students. It focuses on foundational economic concepts.

[@kingslayer4667]

Thank you for making videos......

[@dasteezmister]

Wow! This video made so many lightbulbs go off for me. Cannot thank you guys enough. Your videos do such an amazing job both on the lecture part and the subtle edits. Cheers!

[@sirinath]

Eagerly awaiting next video. Can you do the lectures in conjunction with some text books.